INHERITANCE  TAXE 


INVESTORS 


B221BI 

1911 


THE  LIBRARY 

OF 

THE  UNIVERSITY 
OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 
GIFT  OF 

Robert  A.  Waring 


INHERITANCE   TAXES 


FOR 

INVESTORS 


Some    practical  notes   on    the    inheritance   tax   laws  of 

each  of  the   states   of   the  United  States,  with 

particular  reference  to  their  application 

to  non-resident  investors 


A  reproduction  of  a  series  of  articles  published  in  the  Boston 
News  Bureau  in  February  and  March,   1911 


Revised  and  Annotated  by 

HUGH  BANCROFT 

(Of  the  Massachusetts  Bar) 


Price  -  -  One  Dollar 


BOSTON 
BOSTON  NEWS  BUREAU  COMPANY 

1911 


COPYRIGHT.  191 1.  by 
BOSTON   NEWS   BUREAU   COMPANY 

C,itt 


- 


PREFACE. 

This  is  a  collection  of  a  series  of  articles  published  in  the 
Boston  News  Bureau  in  February  and  March,  1911.  They 
were  prepared  for  the  purpose  of  showing  to  investors  how 
seriously  they  may  be  affected  by  the  inheritance  tax  laws  of 
every  state  in  the  country  as  well  as  the  one  in  which  they  hap- 
pen to  live.  It  was  also  hoped  that  they  might  be  of  some 
help  to  the  movement  for  the  adoption  of  a  uniform  law  that  will 
do  away  with  the  double  taxation  which  is  such  a  frequent 
result  of  the  working  of  the  present  laws. 

The  articles  are  reproduced  with  almost  no  change  in  sub- 
stance, and  in  the  order  in  which  they  were  first  printed.  The 
fact  that  they  were  originally  a  series  of  newspaper  articles 
accounts  for  the  prevalence  of  the  editorial  "we." 

Though  this  is  intended  to  be  only  a  handbook  for  investors 
and  those  called  upon  to  advise  about  investments,  it  is  hoped 
that  it  may  be  found  useful  as  well  by  attorneys  who  wish  to 
obtain  some  familiarity  with  the  situation.  For  that  reason, 
citations  have  been  made  of  some  of  the  more  important  cases. 
In  preparing  these  articles  the  statutes  were  examined  to 
Jan.  1,  1911,  and  there  have  been  no  material  changes  since 
then. 

H.  B. 
March  15,  1911. 

Advantage  has  been  taken  of  a  second  imprint  to  note 
changes  effected  or  pending  in  Maine,  New  Hampshire,  Massa- 
chusetts, New  York  and  Washington. 

H.  B. 
July  1,  1911. 


TABLE  OF  CONTENTS. 


Chapter 
I 

II 


III 
IV 


VI 


VII 


THE  RECENT  DEVELOPMENT  OF  INHERITANCE 
TAXATION  ...... 

INHERITANCE  TAX  LAWS  Now  ENACTED  By 
38  STATES — DIRECT  AND  COLLATERAL  IN- 
HERITANCES DISTINGUISHED 

RATES  OF  TAX  AND  EXEMPTIONS 

THE  STATES  WHICH  TAX  SECURITIES  OWNED 
BY  NON-RESIDENTS  .... 

SOME  GENERAL  RULES — THE  STATES  WHERE 
DOUBLE  TAXATION  Is  MOST  CONSPICU- 
OUS   

THE  STATES  WHICH  HAVE  No  INHERITANCE 
TAX  LAWS 


Page 

Page 

ALABAMA 

26 

INDIANA 

29 

DIST.  OP  COL. 

27 

MISSISSIPPI 

29 

RHODE  ISLAND 

27 

NEVADA 

29 

ARIZONA 

28  ' 

NEW  MEXICO 

29 

FLORIDA 

28 

SOUTH  CAROLINA 

29 

GEORGIA 

28 

THE  STATES  WHICH  HAVE  INHERITANCE 

TAX 

LAWS 

Page 

Page 

PENNSYLVANIA 

30 

NEBRASKA 

76 

VIRGINIA 

33 

WISCONSIN 

78 

MARYLAND 

34 

CALIFORNIA 

81 

DELAWARE 

35 

IDAHO 

83 

OHIO 

36 

MINNESOTA 

84 

MISSOURI 

37 

MONTANA 

86 

MASSACHUSETTS 

38 

NORTH  DAKOTA 

88 

NEW  YORK 

44 

SOUTH  DAKOTA 

89 

OKLAHOMA 

50 

COLORADO 

90 

MAINE 

53 

UTAH 

92 

NEW  HAMPSHIRE 

56 

OREGON 

93 

VERMONT 

58 

WYOMING 

95 

ILLINOIS 

60 

MICHIGAN 

96 

CONNECTICUT 

63 

WEST  VIRGINIA 

98 

NORTH  CAROLINA 

67 

KENTUCKY 

101 

TENNESSEE 

69 

NEW  JERSEY 

103 

ARKANSAS 

70 

LOUISIANA 

106 

TEXAS 

72 

IOWA 

109 

KANSAS 

74 

WASHINGTON 

111 

Page 


10 
13 

16 

21 
26 


30 


TABLE  OF  CONTENTS. 


Chapter 
VIII 

IX 


A  MOVEMENT  FOR  A  UNIFORM  INHERITANCE 
TAX  LAW 

SOME  MATTERS  NOT  TOUCHED  UPON — THE 
POSITION  OF*  TRUST  CERTIFICATES — 
EFFORTS  To  AVOID  DOUBLE  TAXATION 


X        CANADA 
APPENDIX 

LIST  OF  CORPORATIONS 
INDEX 


Page 
113 

116 
120 
125 
127 
139 


THE  NEW  YORK  INHERITANCE  TAX  LAW  OF  1911. 


The  new  inheritance  tax  law  of  New  York  took  effect  July  21 ,  1911 .  It 
substantially  reduces  the  rates  of  tax  but  leaves  them  higher  than  they  were 
before  1910". 

The  law  of  1911  provides  for  the  following  taxes: 

Direct  Inheritances 

including  inheritances  to  father,  mother,  hus- 
band, wife,  child,  brother,  sister,  wife  or  widow  of 
son,  husband  of  daughter,  adopted,  or  mutually 
acknowledged  child,  lineal  descendant: 

First  $5,000 Exempt 

Excess  over       $5, 000  up  to      $50,000 1% 

Excess  over       50,000  up  to      250,000 2% 

Excess  over     250,000  up  to  1,000,000 3% 

Excess  over  1 ,000,000 4% 

Collateral  Inheritances 

including  inheritances  to  persons  other  than 
those  enumerated  above: 

First  $1,000 Exempt 

Excess  over       $1,000  up  to      $50,000 5% 

Excess  over       50,000  up  to      250,000 6% 

Excess  over     250,000  up  to  1,000,000 7% 

Excessover  1,000,000 8% 

The  exemptions  apply  to  each  inheritance  rather  than  to  the  estate  as 
a  whole. 

The  law  of  1910  and  the  earlier  laws  as  well,  taxed  non-residents  on  stocks 
of  New  York  corporations  and  on  bank  deposits  and  bonds  kept  in  safe 
deposit  boxes  within  the  state. 

All  this  is  done  away  with  by  the  new  law  of  1911.  It  is  expressly  pro- 
vided that  the  inheritance  tax  in  the  case  of  non-residents  shall  be  collected 
only  on  "tangible  property"  within  the  state.  "Tangible  property" 
is  denned  as  such  property  as  real  estate,  and  goods,  wares,  and  merchan- 
dise, and  is  not  to  be  taken  to  mean  money,  deposits  in  banks,  shares  of 
stocks  or  bonds. 

Residents  of  New  York  are  to  pay  an  inheritance  tax  on  all  their  intan- 
gible property  wherever  situated  and  on  their  tangible  property  located  within 
the  state.  Intangible  property  is  denned  as  such  property  as  money, 
bank  deposits,  shares  of  stocks,  bonds  and  notes. 

These  provisions  put  to  an  end  the  double  taxation  of  non-residents  t>o 
far  as  New  York  is  concerned.  They  closely  follow  the  model  inheritance 
tax  law  recommended  by  the  International  Tax  Conference.  (See  page 
115  infra.) 

The  example  set  by  New  York  may  lead  other  states  which  are  trying 
to  tax  non-residents  to  come  into  line.  A  resident  of  New  York  state  still 
may  be  liable  for  a  double  inheritance  tax  if  he  owns  stock  of  a  company  in- 
corporated in  a  state  which  is  taxing  the  stock  of  its  corporations  when 
owned  by  non-residents.  If  these  states  do  not  come  in  line,  New  York 
may  yet  adopt  retaliatory  measures  such  as  are  already  found  in  half  a  dozen 
other  states,  for  the  protection  of  her  own  citizens. 


INHERITANCE  TAXES. 


CHAPTER  I. 
THE  RECENT  DEVELOPMENT  OF  INHERITANCE  TAXATION. 

There  are  few  questions  so  important  to  far-sighted 
investors  as  that  of  inheritance  taxes,  and  there  are  few 
subjects  so  little  understood.  This  is  not  in  the  least  surpris- 
ing. A  survey  of  the  situation  in  the  United  States  is  like 
a  journey  through  a  chaos,  peopled  by  sovereign  states,  each, 
wolf-life,  seeking  some  pretext  to  take  for  itself  a  bite  out  of 
every  estate  that  comes  along. 

Most  of  the  inheritance  tax  legislation  is  new — the  Acts  in 
19  states  were  passed  in  1909  and  1910.  Much  of  it  is  ill-con- 
sidered— a  state  enacts  a  law  patterned  after  that  of  another 
without  having  much  idea  what  it  means.  Different  officials 
in  the  same  state  read  the  law  differently  and  many  of  the  most 
important  questions  have  not  yet  been  passed  upon  by  the  courts. 

Until  a  comparatively  short  time  ago  few  states  taxed  in- 
heritances. Those  that  did  were  modest  in  their  demands, 
and  the  payment  of  an  inheritance  tax  to  any  except  the  de- 
ceased's home  state  was  almost  unknown. 

Now  all  but  ten  states  have  an  Inheritance  Tax  Law  of 
some  sort;  25%  is  regarded  as  an  equitable  figure  for  large 
estates  in  some  quarters;  and  tax  attorneys  are  employed  to 
try  to  collect  from  estates  of  men  who  never  lived  in  a  state 
and  never  owned  a  bit  of  property  physically  within  the  state. 


8  INHERITANCE  TAXES. 

Most  of  these  laws  have  been  passed  within  a  dozen  years, 
and  under  them  the  claim  has  been  quite  generally  asserted  and 
enforced  that  the  state  of  incorporation  is  entitled  to  an  inheri- 
tance tax  on  stock  owned  by  a  non-resident,  and  in  some  cases 
on  bonds  as  well. 

As  the  state  of  residence  (with  few  exceptions)  in  no  way  re- 
linquishes or  modifies  its  tax  on  this  account,  it  has  become  fairly 
common  for  estates  to  pay  inheritance  taxes  twice  on  the  same 
shares  of  stock. 

Even  this  is  not  enough.  A  corporation  is  organized  in 
one  state,  does  all  its  business  in  another,  and  the  stockholder 
lives  in  a  third.  We  find  the  second  state  in  several  instances 
seeking  to  tax  the  shares  as  well  as  the  other  two.  If  such  a 
corporation  owns  property  in  several  states  there  are  splendid 
possibilities  for  the  tax  gatherers,  though  no  state  in  the  case  of 
a  corporation  organized  elsewhere  has  gone  further  than  to  claim 
a  tax  based  on  the  proportion  of  the  value  of  the  property 
within  the  state,  to  the  entire  property  of  the  corporation. 

On  the  other  hand,  some  states  allow  credit  for  payments 
made  to  other  states;  exempted  amounts  are  often  so  liberal 
that  ordinary  investment  holdings  escape;  and  taxes  on  property 
going  to  near  relatives  are  frequently  not  onerous. 

Collateral  relatives  and  strangers  seem  to  be  generally 
considered  fair  game,  and  two  states  have  singled  out  the  non- 
resident alien,  one  for  a  20%  tax,  the  other  for  25%.  It  should 
be  said  that  the  Supreme  Court  of  the  latter  state  (Washington) 
has  held  this  invalid. 

In  the  preparation  of  these  articles  the  statutes  and  de- 
cisions of  all  the  states  have  been  examined  down  to  January  1 , 
1911.  As  the  courts  in  most  of  the  states  have  not  passed  upon 
the  questions  that  most  affect  non-residents,  and  the  language 
of  the  statutes  themselves  is  seldom  specific  as  to  their  applica- 


INHERITANCE  TAXES.  9 

tion  to  non-residents,  information  has  been  sought  from  the  tax 
commissioner,  attorney-general  or  other  appropriate  officer  to 
find  out  how  the  tax  authorities  in  each  state  are  construing 
their  own  law.  In  very  few  states  is  there  any  well-established 
practice  in  inheritance  tax  matters,  and  many  of  the  present 
rulings  may  be  changed  at  any  time  by  the  courts  or  by  the  tax 
authorities  themselves. 


CHAPTER  II. 

INHERITANCE    TAX    LAWS    Now    ENACTED    By    38     STATES — 
DIRECT  AND  COLLATERAL  INHERITANCES  DISTINGUISHED. 

Before  entering  the  maze  of  inheritance  tax  legislation,  the 
investor  can  somewhat  simplify  his  problem  by  a  process  of 
elimination. 

Inheritance  tax  laws,  as  a  rule,  tax  all  property,  real  or 
personal,  situated  within  the  state  whether  owned  by  a  resident 
or  non-resident,  and  also  personal  property  of  a  resident  which 
is  situated  without  the  state. 

Such  laws  have  been  enacted  by  all  but  ten  states,  and  the 
District  of  Columbia.  The  investor  may  then  become  fully 
posted  as  to  the  future  of  his  estate  so  far  as  the  states  of  the 
Union  are  concerned,  by  the  study  of  38  enactments,  adding 
Hawaii  and  Porto  Rico  if  he  chooses.  There  is  yet  a  chance 
that  his  labors  may  be  further  simplified,  for  13  of  the  states 
exempt  direct  inheritances  and  tax  only  collateral  inheritances. 

By  a  direct  inheritance  is  meant,  usually,  property  passing 
to  a  father,  mother,  husband,  wife,  child  (including  adopted 
child)  and  lineal  descendant.  Some  states  include  brothers  and 
sisters  and  also  the  wife  of  a  son  and  husband  of  a  daughter. 
By  a  collateral  inheritance  is  meant  property  passing  to  other 
more  distant  relatives  or  to  strangers. 

If  the  investor  is  satisfied  to  have  his  property  "stay  in  the 
family,"  he  may  reduce  his  labors  to  the  study  of  25  enactments. 

The  United  States  government  itself  at  the  present  time 
imposes  no  inheritance  tax.  Such  laws  were  in  force,  however, 
as  war  revenue  measures  from  1862  to  18-2  and  again  from  1898 


INHERITANCE  TAXES.  11 

to  1902.     The  federal  government  has  full    power  at  any  time 

to  impose  its  own  tax  on  inheritances  in  addition    to  the  state 
taxes. 1 

The  following  table  indicates  what  states  have  an  inheritance 
tax,  what  states  tax  direct    inheritances  and  what  states  tax 

collateral  inheritances: 

Inheritance  Direct  Collat. 

State:                                    tax  law?  inht.  tax?  inht.  tax? 

Alabama No  No  No 

Arizona No  No  No 

Arkansas Yes  Yes  Yes 

California Yes  Yes  Yes 

Colorado Yes  Yes  Yes 

Connecticut    Yes  Yes  Yes 

Delaware Yes  No  Yes 

District  of  Columbia  ....      No  No  No 

Florida    No  No  No 

Georgia No  No  No 

Hawaii Yes  Yes  Yes 

Idaho Yes  Yes  Yes 

Illinois Yes  Yes  Yes 

Indiana No  No  No 

Iowa    Yes  No  Yes 

Kansas    Yes  Yes  Yes 

Kentucky Yes  No  Yes 

Louisiana    Yes  Yes  Yes 

Maine    Yes  Yes  Yes 

Maryland Yes  No  Yes 

Massachusetts Yes  Yes  Yes 

Michigan Yes  Yes  Yes 

Minnesota Yes  Yes  Yes 

Mississippi    No  No  No 

Missouri Yes  No  Yes 

Montana Yes  Yes  Yes 

Nebraska    Yes  Yes  Yes 

Nevada No  No  No 

New  Hamsphire Yes  No  Yes 

New  Jersey Yes  No  Yes 

New  Mexico No  No  No 

New  York Yes  Yes  Yes 

North  Carolina  .                      Yes  Yes  Yes 


1  Knowlton  vs.  Moore,  178  TJ.  S.  41. 

cf  President  Roosevelt's  message  of  Dec.  4,  1906.  "There  is  every 
reason  why,  when  our  system  of  taxation  is  revised,  the  National  Govern- 
ment should  impose  a  graduated  inheritance  tax." 


12  INHERITANCE  TAXES. 

Inheritance  Direct  Collat. 

State:                                   tax  law?     inht.  tax?  inht.  tax? 

North  Dakota    Yes  No  Yes 

Ohio Yes  No  Yes 

Oklahoma Yes  Yes  Yes 

Oregon Yes  Yes  Yes 

Pennsylvania.  .  .«. Yes  No  Yes 

Porto  Rico    Yes  Yes  Yes 

Rhode  Island    No  No  No 

South  Carolina No  No  No 

South  Dakotaf Yesf  Yesf  Yesf 

Tennessee Yes  Yes  Yes 

Texas Yes  No  Yes 

Utah    Yes  Yes  Yes 

Vermont Yes  No  Yes 

Virginia Yes  No  Yes 

Washington    Yes  Yes  Yes 

West  Virginia Yes  Yes  Yes 

Wisconsin Yes  Yes  Yes 

Wyoming    Yes  Yes  Yes 


T  Smith  Dakota.  The  inheritance  tax  law  has  been  held  unconstitu- 
tional in  the  State  Supreme  Court,  but  a  re-hearing  has  been  granted,  and 
the  matter  is  still  pending. 


CHAPTER  III. 
RATES  OF  TAX  AND  EXEMPTIONS. 

The  principle  of  exempting  small  inheritances  from  any 
tax  is  very  generally  recognized,  but  there  is,  as  might  be  expected 
a  wide  diversity  in  the  amount  of  the  exemption  and  in  the  rates 
of  tax. 

In  nearly  every  state  direct  inheritances  are  treated  much 
more  liberally  than  collateral  inheritances,  both  as  to  rates  and 
as  to  exemptions. 

Thirteen  of  the  38  states  with  inheritance  tax  laws  exempt 
direct  inheritances  altogether.  All  but  Minnesota  and  Utah  tax 
direct  inheritances  at  a  lower  rate,  and  all  but  Minnesota,  North 
Carolina  and  Utah  grant  larger  exemptions  to  direct  inheritances 
than  to  collateral  inheritances. 

As  many  of  the  states  have  complicated  schemes  of  grad- 
uated rates  and  exemptions,  there  is  some  difficulty  in  presenting 
a  simple,  comparative  table.  The  appended  table  shows  the 
extreme  range  of  rates  and  exemptions. 

On  direct  inheritances  1%  is  the  favorite  rate,  and  $10,000 
is  the  common  exemption.  The  husband  or  wife  and  children 
are  most  favored  where  there  are  graduated  rates,  and  large  in- 
heritances are  taxed  more  than  small  ones.  5%  is  the  maximum 
tax  on  any  direct  inheritance  and  this  figure  is  levied  in  only 
four  states. 

On  collateral  inheritances  the  common  minimum  rate  is 
5%,  with  maximum  rates  running  up  to  10,  15,  and  in  New  York 
25%.  Exemptions  seldom  exceed  $500,  though  four  states 


14  INHERITANCE  TAXES. 

exempt  $10,000,  and  one  state  $25,000.  When  the  rates  and 
exemptions  are  graduated,  nearness  of  relationship  is  usually 
considered,  and  the  heavy  rates  are  imposed  on  large  inheritances. 
New  York's  25%  rate,  for  instance,  applies  only  to  the  excess  on 
collateral  inheritance^  over  $1,000,000. 

It  is  almost  invariably  the  size  of  the  inheritance,  not  the  size 
of  the  estate,  that  determines  the  tax.  Thus  an  estate  of  $30,000 
passing  in  three  equal  shares  to  the  widow  and  two  children, 
in  a  state  with  an  exemption  of  $10,000,  would  pay  no  tax; 
that  is,  unless  property  is  specifically  devised,  it  is  usually  taxed 
as  though  a  pro  rata  share  were  given  to  each  beneficiary  of  the 
estate.  The  table  follows: 

Direct  inheritances  Collateral  inheritances 


Alabama    .  . 
Arizona    .  .  . 
Arkansas*    . 
California    . 
Colorado    .  . 
Conn*  a.  ... 

Rate 

'            1% 

'      *2% 

1% 

Exemption 
Not  taxed 
Not  taxed 
$5,000 
4,000-10,000 
10,000 
10,000 
Not  taxed 
Not  taxed 
Not  taxed 
Not  taxed 
1,000 
4,000-10,000 
20,000 
Not  taxed 
Not  taxed 
5,000 
Not  taxed 
10,000 
500-10,000 
Not  taxed 
1,000-10,000 
2,000 
10,000 
Not  taxed 
Not  taxed 
7,500 
10,000 

Rate 

3<gUO% 
5% 
1@5% 

5% 

5% 
3@15% 

5% 
5% 
4@7% 
5% 
3@5% 
5% 

5% 
5% 

Exemption 
Not  taxed 
Not   taxed 
$1,000-2,000 
500-2,000 
500 
Nothing 
500 
Not  taxed 
Not  taxed 
Not  taxed 
50C 
500-2,000 
500-2,000 
Not  taxed 
1,000 
0-1,000 
500 
Nothing 
500 
500 
1,000 
100 
10,000 
Not  taxed 
Nothing 
500 
500-2,000 

Delaware  .  . 
DistofCol 
Florida  .... 

Georgia    .  . 
Hawaii  ... 

2% 

Idaho  .... 

1@3% 

Illinois.  .  .  . 

Indiana    .  . 
Iowa*  b  .  .  . 

Kansas  .  .  . 

1@5*7 

Kentucky 
Louisiana  c 
Maine  .... 

"         2% 

Maryland*  .  . 
Massachusetts  1@2% 
Michigan  ...         1% 
Minnesota  .  .  1$@5% 
Mississippi 
Missouri  .... 
Montana*    .  .         1% 
Nebraska  .  .  .          1% 

INHERITANCE  TAXES. 


15 


Direct  inheritances 


Collateral  inheritances 


Nevada    .... 
New  Hamp.  . 
New  Jersey    . 
New  Mexico 
New  York    .  . 
N.  Carolina  d 
N.Dakota  .  . 
Ohio  *  

Rate 
1@5% 

Exemption 
Not  taxed 
Not  taxed 
Not  taxed 
Not  taxed 
500-5,000 
2,000 
Not  taxed 
Not  taxed 

Rate 

5% 

5% 

5@25% 

oC7 
A  /o 

5% 

Exemption 
Not  taxed 
Nothing 
500 
Not  taxed 
100 
2,000 
25,000 
200 

Oklahoma  e.. 
Oregon/  .... 
Penn  

1% 
1% 

5,000-10,000 
5,000 
Not  taxed 

2@6% 
5% 

100-500 
500-2,000 
250 

Porto  Rico  .  . 
R.  Island   .  .  . 
S.  Carolina    . 
S.  Dakota    .  . 
Tennessee*    .  ] 
Texas  

1% 
l@l|% 

200 
Not  taxed 
Not  taxed 
5,000-20,000 
5,000 
Not  taxed 

3@9% 

2@10% 

5% 
2@12% 

200 
Not  taxed 
Not  taxed 
100-500 
250 
500-2,000 

Utah*  

5% 

10,000 

5% 

10,000 

Vermont    .  .  . 
Virginia  

Not  taxed 
Not  taxed 

5% 
5% 

Nothing 
Nothing 

Washington*  g 
W.  Virginia  . 
Wisconsin    .  . 
Wyoming*  .  . 

!       1% 
1@3% 

10,000 
10,000-15,000 
2,000-10,000 
10,000 

3@12% 
3@15% 

5% 

Nothing 
Nothing 
100-500 
500 

*     The  exemption  in   the  states  marked  with  an  asterisk  has  been  con- 
strued to  apply  to  the  estate  as  a  whole  rather  than  to    individual  shares. 

a.  Connecticut — For   non-residents,    exemption   varies     according   to 
portion  of  estate  within  the  state. 

b.  Iowa  taxes  non-resident  aliens  10-20%. 

c.  Louisiana  exempts  property  that  bore  its  just  proportion  of   taxes 
during  owner's  life. 

d.  North  Carolina — Exempts  husband  or  wife. 

e.  Oklahoma — The  tax  increases  progressively  so  that  a    literal  con- 
struction would  result  in  confiscation  of  all  in  excess  of    certain  amounts 
in  large  estates. 

/.     Oregon — Exempts  entire  estate  if  less  than  $10,000,   direct;    $500 
to  $5000  collateral. 

g.     Washington  25%  tax  on  non-resident  aliens  held  invalid. 


CHAPTER  IV. 

THE    STATES    WHICH    TAX    SECURITIES    OWNED     BY    NON- 
RESIDENTS. 

The  states  that  have  inheritance  tax  laws,  as  a  rule,  tax  all 
property  that  is  situated  in  the  state,  whether  the  owner  was 
a  resident  or  not. 

Herein  lies  the  importance  to  the  investor  of  an  acquaintance 
with  the  inheritance  tax  laws  of  the  states  other  than  the  one 
in  which  he  lives,  especially  because  most  states  do  not  confine 
themselves  to  property  physically  within  the  state. 

These  states  treat  shares  in  corporations  organized  under 
their  laws  as  subject  to  an  inheritance  tax  though  held  without 
the  state  by  a  non-resident.  This  is  on  the  theory  that  as  the 
corporation  itself  is  a  creature  of  the  state,  its  shares  are  sub- 
ject to  the  jurisdiction  of  the  state,  wherever  owned. 

As  the  state  of  residence  taxes  such  stock,  the  result  is  that 
two  states  tax  the  same  succession.  The  Supreme  Court  of 
the  United  States  though  recognizing  the  hardship  of  the 
practice  has  decided  that  the  Constitution  does  not  prohibit 
such  double  taxation. 1 

Collection  of  this  tax  is  usually  enforced  by  holding  the 
corporation  itself  responsible  if  it  permits  the  transfer  of  stock 
for  a  foreign  executor  or  administrator  before  the  tax  is  paid. 

Because  of  a  retaliative  provision  in  the  laws  of  Connecticut, 
which  will  be  discussed  later,  the  tax  commissioner  of  that  state 
considers  it  his  duty  to  obtain  official  information  from  the  differ- 


1  Blackstone  vs.  Miller,  188  U.  S.  189. 


INHERITANCE  TAXES.  17 

ent  states  as  to  whether  they  tax  stock  of  corporations  organized 
under  their  laws  if  owned  by  non-residents.  Under  date  of 
Dec.  15,  1910,  he  enumerates  the  following  states  as  taxing  such 
stock,  though  owned  by  a  non-resident,  if  the  certificates  are 
kept  outside  the  state: 

Colorado  New  Hampshire 

Illinois  New  Jersey 

Iowa  New  York 

Kansas  North  Carolina 

Maine  Oklahoma 

Massachusetts  Vermont 

Michigan  Wisconsin 

In  addition  to  these  states,  information  is  at  hand  from 
officials  of  the  following  states  to  the  effect  that  they  tax  stock  of 
domestic  corporations  owned  by  a  non-resident  without  any 
intimation  that  it  makes  any  difference  whether  the  certificate 
is  kept  within  or  without  the  state: 

Arkansas  Minnesota 

California  Missouri 

Kentucky  Washington 

Louisiana  West  Virginia 

The  statutes  of  the  following  states  would  seem  to  authorize 
the  collection  of  such  a  tax,  and  it  would  not  be  surprising  to  find 
these  states  enforcing  it  at  any  time: 

Idaho  Tennessee 

Nebraska  Wyoming 

All  bonds  are  taxed  where  the  owner  resides  and  if  kept 
in  another  state  are  likely  to  be  taxed  there  as  well. 

A  tax  by  the  state  of  incorporation  on  bonds  owned  by  non- 
residents, if  kept  outside  the  state,  would  seem  to  be  invalid 
under  the  general  principles  of  taxation,  yet,  except  in 
Maine  and  Massachusetts,  in  all  the  states  which  are  taxing 
stock  in  domestic  corporations  owned  by  non-residents,  the  lan- 
guage of  the  law  is  broad  enough  to  include  bonds  as  well. 

The  tax  commissioner  of    Connecticut  is  officially  advised 


18  INHERITANCE  TAXES. 

that  the  following  states  tax  registered  bonds  of  corporations 
organized  under  their  laws,  though  the  bonds  are  owned  by  a 
non-resident  and  kept  outside  the  state. 

Colorado  New  Hamsphire 

Kansas  Oklahoma 

Michigan   '  Vermont 

It  would  not  be  surprising  to  find  almost  any  of  the  states 
that  are  taxing  stock  of  domestic  corporations  owned  by  non- 
residents at  any  time  added  to  the  list  of  those  taxing  registered 
bonds  of  non-residents,  especially  Louisiana,  whose  statute  men- 
tions registered  bonds.  There  are  even  signs  of  an  effort  in  some 
states  to  reach  coupon  bonds  as  well. 

Only  six  states  have  laws  tending  to  reduce  or  eliminate 
this  double  taxation  on  stocks  and  bonds.  Maine  and  Vermont  give 
credit  for  taxes  paid  to  any  other  state.  Massachusetts  and 
Kansas  give  credit  for  taxes  paid  to  states  which  reciprocate. 
West  Virginia  and  Connecticut  have  a  retaliative  provision 
taxing  the  shares  in  domestic  corporations  of  only  such  non- 
residents as  reside  in  states  that  claim  such  a  tax  for  themselves. 

Several  states  have  recently  been  claiming  an  inheritance 
tax  on  stock  of  non-residents  in  corporations  which  are  not 
even  organized  under  their  laws,  but  own  property  within  the 
state.  The  legality  of  such  a  tax  is  disputed,  but  we  have  not 
heard  of  any  decisions  as  yet.  The  states  marked  "Yes"  in 
the  second  column  of  the  appended  table  claim  the  right  to  col- 
lect such  a  tax;  the  states  marked  "No"  say  positively  that 
they  do  not  claim  it,  and  in  the  states  marked  with  a  star  the 
question  has  not  been  raised. 


INHERITANCE  TAXES.  19 

Are  shares       Is  tax  claimed  on 
of  non-residents    stk.  of  foreign 
in  local  corp.        corp.  owning 
subject  to  tax?     prop,  in  state? 

Alabama No  No 

Arizona No  No 

Arkansas Yes 

California!    Yes 

Colorado!**    Yes 

Connecticut!    Yes  No 

Delaware No 

Florida    No  No 

Georgia No  No 

Idaho! No§ 

Illinois! Yes  Yes 

Indiana No  No 

Iowa!    Yes  Yes 

Kansas!** Yes  No 

Kentucky!    Yes  Yes 

Louisiana    Yes 

Maine! Yes 

Maryland No  No 

Massachusetts!    Yes  No 

Michigan!** Yes  No 

Minnesota! Yes  No 

Missouri! Yes  Yes 

Mississippi No  No 

Montana! Nof  Yes 

Nebraska! No§ 

Nevada  .  . No  No 

New  Hampshire!** Yes  Yes 

New  Mexico No  No 

New  Jersey! Yes 

New  York!   Yes  No 

North  Carolina! Yes 

North  Dakota    Nof 

Ohio Nof  No 

Oklahoma!**    Yes 

Oregon! Nof  No 

Pennsylvania!    No  No 

Rhode  Island    No  No 

South  Carolina No  No 

South  Dakota! Nof  No 

Tennessee! No§ 

Texas Nof  * 

Utah!    Yes 

Vermont!**    Yes  Yes 

Virginia No  * 


20  INHERITANCES  TAXES. 

Are  shares      Is  tax  claimed  on 

of  non-residents  stk.  of  foreign 

in  local  corp.  corp.  owning 

subject  to  tax?  prop,  instate? 

Washington!    Yes  Yes 

West  Virginia^  Yes  No 

Wisconsin!  .• Yes  Yes 

Wyoming!    Nof  * 


•This  question  does  not  seem  to  have  been  raised  or  passed  upon  in 
the  states  marked  with  an  asterisk. 

tUnder  substantially  similar  laws,  other  states  are  taxing  such  stock. 
In  the  states  so  marked,  however,  no  claim  is  made  for  such  a  tax,  or  else 
there  is  no  effective  method  provided  for  collecting  it. 

?  In  the  states  so  marked  it  was  apparently  the  opinion  of  their  tax 
officials  in  1910  that  they  were  not  entitled  to  collect  such  a  tax,  and  we 
do  not  know  that  the  law  is  now  being  construed  differently.  Their  laws, 
however,  are  practically  identical  with  the  laws  of  states  which  claim  this 
tax  and  moreover  contain  a  provision  for  enforcing  its  collection. 

Jin  states  so  marked  a  corporation  transferring  stock  or  delivering 
securities  is  held  responsible  itself,  if  the  inheritance  tax  has  not  been  paid. 

*  These  states  also  tax  registered  bonds  of  local  corporations  owned 
by  non-residents. 


CHAPTER  V. 

SOME  GENERAL  RULES — THE  STATES  WHERE    DOUBLE  TAXA- 
TION Is  MOST  CONSPICUOUS. 

Before  proceeding  to  examine  the  laws  and  practice  of  the 
individual  states,  it  may  be  useful  to  summarize  the  rules  which 
may  be  taken  to  be  of  general  application,  unless  exceptions  are 
specially  noted.  The  property  subject  to  tax  under  the  in- 
heritance tax  laws  of  any  state  can  be  classified  as  follows: 

Residents, — 

Real  estate  within  the  state  (but  nor  real  estate 
outside  the  state) 

Personal  property  of  every  description,  tan- 
gible or  intangible  whether  held  within  or  with- 
out the  state. 

Non-residents, — 

Real  estate  within  the  state. 
Tangible  personal  property  within  the  state. 
Stocks   in   corporations   organized    under   the 
laws  of  the  state. 

As  to  other  forms  of  intangible  personal  property  of  non- 
residents (we  include  securities  under  intangible  property)  some 
further  discussion  is  desirable. 

The  states  that  tax  stock  in  domestic  corporations  owned  by 
non-residents  usually  tax  shares  in  national  banks  doing  busi- 
ness within  the  state  as  well.  This  tax  can  hardly  be  justified 
on  the  ground  that  the  bank  is  a  creature  of  the  state.  Bank 
deposits  of  non-residents  are  similarly  treated. 

The  personal  property  of  a  resident  which  is  held  outside 
of  the  state  is  taxed  on  the  theory  that  personal  property  follows 
the  domicile  of  its  owner.  The  intangible  personal  property 


22  INHERITANCE  TAXES. 

of  a  non-resident  actually  or  theoretically  within  the  state  is 
taxed  because  it  can  be;  so  why  bother  with  theories? 

Where  a  non-resident  keeps  securities  in  the  state,  as  in  a 
safe  deposit  vault,  there  is  a  distinction  made  between  stocks  and 
bonds.  The  more  common  practice  is  to  tax  all  such  bonds, 
whether  they  are  bonds  of  domestic  or  foreign  corporations,  but 
the  common  rule  is  not  to  tax  certificates  of  stock  of  a  foreign 
corporation  so  kept  by  a  non-resident  within  the  state.  A  con- 
spicuous exception  is  found  in  the  case  of  Pennsylvania,  which 
very  properly  does  not  tax  the  intangible  personal  property  of 
a  non-resident  kept  within  the  state,  whether  in  the  form  of  stocks 
or  bonds. 

In  the  case  of  non-residents  the  practice  varies  as  to  the 
application  of  exemptions.  The  Massachusetts  rule  is  to  con- 
sider the  entire  amount  of  the  inheritance  in  deciding  whether 
it  is  exempt,  and  not  merely  the  portion  of  the  property  taxable 
in  Massachusetts.  Thus  an  inheritance  to  a  child  of  a  non- 
resident of  $100,000,  of  which  $10,000  is  in  stock  of  a  Massa- 
chusetts corporation,  is  not  exempt  in  Massachusetts,  although 
the  Massachusetts  exemption  is  $10,000  on  an  inheritance  to  a 
child.  The  total  amount  of  the  inheritance  is  considered 
for  the  purpose  of  determining  whether  the  inheritance  is  taxable 
at  all;  the  tax,  if  imposed,  is  based  only  on  the  portion  subject 
to  the  jurisdiction  of  the  state.  This  is  the  common  rule,  but 
some  states  claim  no  tax  if  the  portion  of  the  inheritance  subject 
to  their  jurisdiction  does  not  exceed  their  exemption. 

The  common  practice  of  requiring  non-resident  executors 
and  administrators  to  file  complete  inventories,  copies  of  probate 
records  and  other  similar  documents  before  consent  is  given  to  the 
transfer  of  stock  may  be  a  source  of  considerable  expense  as  well 
as  annoyance.  We  hear  of  an  English  estate  owning  stock  to 
the  value  of  $4180  in  Illinois  Central  (Illinois  corporation),  Ch., 


INHERITANCE  TAXES.  23 

St.  P.,  Minn.  &  Omaha  (Wisconsin  corporation)  and  Long  Island 
Railroad  (New  York  corporation).  In  getting  these  securities 
transferred  the  expenses  amounted  to  between  $125  and  $150, 
irrespective  of  the  inheritance  taxes. 

The  claim  of  some  states  to  a  tax  on  shares  of  corporations 
organized  elsewhere  but  owning  property  within  the  state  may 
often  be  of  only  academic  interest  to  a  non-resident  investor.  A 
Boston  estate  has  stock  of  a  New  Jersey  corporation  owning 
property  in  Iowa.  Iowa  claims  an  inheritance  tax  on  such  stock 
as  well  as  Massachusetts  and  New  Jersey.  Unless  this  estate 
owns  other  property  in  Iowa  or  stock  in  some  corporation  organ- 
ized under  Iowa  laws,  Iowa  would  have  some  difficulty  in  enforc- 
ing the  claim. 

This  sort  of  tax  is  successfully  enforced  where  the  tax 
authorities  require  a  complete  inventory  of  the  estate  when 
a  non-resident  presents  stock  for  transfer.  Then  the  state 
is  in  a  position  to  collect  almost  any  tax  it  chooses  to  claim 
by  holding  up  the  transfer  until  it  is  paid. 

The  Inheritance  Tax  Law  committee  of  the  International 
Tax  Association  names  New  York  as  a  most  flagrant  offender  in 
the  matter  of  double  taxation  under  its  inheritance  tax  law  and 
joins  with  it  in  this  respect  Colorado,  Connecticut,  Illinois, 
Iowa,  Kansas,  Maine,  Massachusetts,  Michigan,  New  Hamp- 
shire, New  Jersey,  New  York,  North  Carolina,  Oklahoma, 
Vermont  and  Wisconsin.  If  this  list  were  to  be  criticised  it 
would  be  only  on  the  score  of  its  brevity. 

It  is  certainly  true  that  some  states  are  very  much  more 
active  than  others  in  seeking  to  collect  inheritance  taxes  from 
non-residents.  New  York  and  Illinois  can  safely  be  awarded  the 
leadership  in  this  respect. 

In  New  York  the  consternation  among  investors  caused  by 
its  maximum  rate  of  25%  has  led  many  bodies,  including  the 


24  INHERITANCE  TAXES. 

New  York  Chamber  of  Commerce,  to  advocate  the  repeal  of  the 
law.i  Yet  this  particular  rate  is  not  likely  to  be  collected  very 
often  because  it  applies  only  to  the  excess  over  $1,000,000  of 
an  inheritance  devolving  on  a  person  either  only  collaterally 
related  or  else  a  stranger  to  the  deceased.  It  is,  however,  the 
most  striking  of  the  many  objectionable  features  of  the  law  in 
this  jurisdiction. 

To  balance  Illinois's  activity  in  the  enforcement  of  its 
claims,  its  exemption  of  $20,000  on  direct  inheritances  is  the  most 
liberal  in  the  country,  and  allows  many  estates  owning  prop- 
erty coming  under  the  jurisdiction  of  Illinois  to  be  settled  with- 
out paying  any  tax  to  that  state. 

It  is  not  uncommon  to  find  estates  passing  to  direct  heirs 
little  troubled  by  inheritance  taxes  of  other  states.  As  has 
already  been  pointed  out,  the  exemption  frequently  applies  to 
the  interest  of  each  heir,  not  merely  to  the  estate  as  a  whole. 
An  estate  of  a  man  with  several  children  is  thus  often  in  a  better 
position  than  the  estate  of  a  man  with  a  single  child.  This 
result  must  unquestionably  meet  with  the  approval  of  a  certain 
eminent  person  who  has  been  a  conspicuous  advocate  of  a  heavy 
tax  on  the  estates  of  malefactors  of  great  wealth. 

The  multiplication  of  inheritance  taxes  imposes  a  very  real 
burden  on  collateral  inheritances.  With  the  usual  exemption 
limited  to  $500,  and  5%,  the  minimum  rate,  the  collateral  rela- 
tive who  receives  a  bequest  of  even  ten  shares  of  any  ordinary 
investment  stock  is  likely  to  pay  at  least  10%  in  inheritance 
taxes. 

There  is  little  question  but  that  the  states  with  stringent  in- 
heritance tax  laws  affecting  non-residents  will  lose  in  the  end.  Such 
laws  will  certainly  tend  to  drive  outside  capital  from  the  state. 
The  strong  demand  by  local  investors  for  stock  in  Massachusetts 
corporations  is  not  wholly  due  to  their  exemption  from  current 


i  Governor  Dix  in  a  special  message  to  the  legislature  in  March,  1911, 
called  for  the  repeal  of  this  law. 


INHERITANCE   TAXES.  25 

taxation.  The  assurance  that  only  one  inheritance  tax  can  be 
collected  on  such  stock  is  an  element  of  attractiveness  to  the 
careful  investor.  This  holds  true  of  the  local  securities  in  every 
state. 


CHAPTER     VI. 
THE  STATES  WHICH  HAVE  No  INHERITANCE    TAX  LAW. 

There  are  no  inheritance  tax  laws  in  the  following  jurisdic- 
tions: 

Alabama  Mississippi 

Arizona  Nevada 

Florida  New  Mexico 

Georgia  Rhode  Island 

Indiana  South  Carolina 

District  of  Columbia 

The  estates  of  residents  of  these  states  pay  no  inheritance 
taxes  except  such  as  other  states  may  be  able  to  extract.  Estates 
of  non-residents  are  not  called  upon  to  pay  a  double  tax  on  cor- 
porations organized  under  their  laws. 

It  will  be  noted  that  five  of  these  states  are  in  the  South, 
a  portion  of  the  country  which  has  been  very  conservative  in 
inheritance  tax  legislation. 

1. 
ALABAMA. 

Alabama  had  a  collateral  inheritance  tax  on  personal  prop- 
erty only  from  1848  to  1868.  The  constitution  of  1901  forbids 
a  direct  inheritance  tax,  and  limits  any  collateral  inheritance  tax 
that  may  be  enacted  to  2.$%.  No  inheritance  tax  law  has  been 
enacted  since  the  adoption  of  this  constitution. 

Among  the  better  known  corporations  organized  under  the 
laws  of  Alabama  are: 

Birmingham    Ry.,  Lt.    &    Power. 
Lanett  Cotton  Mills 
Mobile  Electric  Co. 


INHERITANCE  TAXES.  27 

2. 
DISTRICT  OF  COLUMBIA. 

A  bill  for  an  inheritance  tax  in  the  District  of  Columbia 
passed  the  House  in  December,  1910,  but  did  not  pass  the 
Senate.1 

It  proposed  to  tax  direct  inheritances  from  $10,000  to 
$100,000,  1%;  $100,000  to  $500,000,  1\  %;  over  $500,000, 
5%;  collateral  inheritances,  uniformly  5%  on  the  excess  over 
$3000. 

Among   the   more  prominent  companies  organized  under  the 

laws  of  the  District  of  Columbia  are: 
Capital  Traction  Co. 
Washington  Ry.  &  Elec. 

3. 
RHODE     ISLAND. 

The  desirability  of  Newport  as  a  place  of  residence  is  cer- 
tainly not  diminished  by  the  absence  of  an  inheritance  tax  law 
in  Rhode  Island.  All  is  not  serene  in  this  quarter,  for  a  joint 
special  committee  on  taxation  recommended  a  draft  of  an  in- 
heritance tax  law  in  1910,  but  it  was  not  enacted.  The  same 
committee  reported  again  in  1911,  recommending  a  tax  on  col- 
lateral inheritances. 

Among  the  more  prominent   companies  organized  under  the 

laws  of  Rhode  Island  are: 

American  Screw  Co. 
Gorham  Mfg.  Co. 
Lorraine  Mfg.  Co. 
Nicholson  File  Co. 
Providence  Gas  Co. 
Providence  Telephone  Co. 

New  York,  New  Haven  &  Hartford,  though  primarily  a 
Connecticut  corporation,  is  also  incorporated  in  Rhode  Island 
as  well  as  Massachusetts. 


61st  Congress,  3d  Session,  H.  R.  22,842. 


28  INHERITANCE    TAXES. 

4. 
ARIZONA. 

Arizona  has  no  inheritance  tax  and  has  never  had  an  in- 
heritance tax. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  Arizona  are: 

Butte-Ballaklava 
Calumet  &  Arizona 
East  Butte 
Helvetia 
Superior  &  Boston 

5. 
FLORIDA. 

Florida  has  no  inheritance  tax  and  has  never  had  an  in- 
heritance tax. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  Florida  are: 

Jacksonville  Elec.  Co. 
Tampa  Elec.  Co. 

6. 
GEORGIA. 

Georgia  has  no  inheritance  tax  and  has  never  had  an  in- 
heritance tax. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  Georgia  are: 

Central  R.  R.  of  Ga. 
Georgia  Ry.  &  Elec. 
Savannah  Elec.  Co. 


INHERITANCE    TAXES.  29 

7. 
INDIANA. 

Indiana  has  no  inheritance    tax  and  has  never     had     an 

inheritance  tax.     An  attempt  to  pass  such  a  law  in  1911  failed. 

Among  the  more  prominent   companies  organized  under  the 

laws  of  Indiana  are: 

Indiana  Lighting  Co. 

Lake  Shore  &  Michigan  Southern  (also  111.,  Ohio,  Mich., 
Pa.,N.  Y.) 

New  York,  Chicago  &  St.  Louis  (also  N.  Y.,  Pa.,  Ohio.) 

Pitts.,  Cincinnati,  Chicago  &  St.  Louis  (also  Pa.,  W.  Va., 
Ohio  and  111.) 

Pittsburg,  Fort  Wayne  &  Chicago  (also  Pa.,  Ohio,  111.) 

Terre  Haute,  Indianapolis  &  Eastern  Tr.  Co. 

Terre  Haute  Tr.  &  Lt.  Co. 

Toledo,  St.  Louis  &  Western. 

8. 
MISSISSIPPI. 

9. 
NEVADA. 

10. 
NEW    MEXICO. 

11. 
SOUTH    CAROLINA. 

These  four  states  have  no  inheritance  tax  law  and  have  never 
had  any  inheritance  tax  law. 

There  are  no  companies,  whose  securities  are  of  general 
investment  importance  to  non-residents,  organized  under  the 
laws  of  any  of  them.  The  large  companies  doing  business  in 
these  states  are  usually  incorporated  under  the  laws  of  other 
states. 


CHAPTER  VII. 
THE  STATES  WHICH  HAVE  INHERITANCE  TAX  LAWS. 

1. 
PENNSYLVANIA. 

THE    PIONEER    WHOSE    INTELLIGENT    EXAMPLE     HAS    FOUND 
SCANT  FOLLOWING. 

Pennsylvania,  the  first  state  to  enact  an  inheritance  tax 
law,  is  one  of  the  few  states  that  has  shown  sanity  in  legislation 
and  interpretation.  Direct  inheritances  and  the  personal  property 
of  non-residents  are  very  properly  let  alone,  and  the  law  has 
been  so  construed  as  to  avoid  double  taxation. 

The  original  law  was  enacted  in  Pennsylvania  in  1826 
and,  with  very  few  changes,  it  is  the  law  today.  The  law 
was  codified  in  1887 l  and  slightly  amended  in  1905. 2 

Collateral  inheritances  only  are  taxed.  The  rate  is  uni- 
formly 5%  and  the  exemption  is  $250.  The  inheritances  not 
taxed  are  those  to  father,  mother,  husband,  wife,  child,  step- 
child,8 lineal  descendant  and  daughter-in-law.  It  has  been 
held  that  inheritances  to  a  grandparent,  an  adopted  child  and 
a  son's  widow  who  has  remarried,  are  taxable.4 

No  attempt  is  made  to  tax  stock  in  Pennsylvania  corpo- 
rations owned  by  a  non-resident,  and  securities  kept  in  the  state 
by  a  non-resident  are  not  subject  to  the  tax. 6  This  has  been 

1  Act  of  May  6,  1887,  P.  L.  79. 

2  Act  of  April  22.  1905,  P.  L.  258. 
*  Com.  vs.  Randall,  225  Pa.  197. 

4  McDowell  vs.  Adams,  45  Pa.  430.  Com.  vs.  Nancrede,  32   Pa.  389. 
Com.  vs.  Powell,  51  Pa.  438. 

6  Orcutt's  appeal,  97  Pa.  179. 


INHERITANCE  TAXES.  31 

an  important  factor  in  the  great  growth  of  the  safe  deposit 
business  of  the  Philadelphia  trust  companies. 

There  was  a  case  where  a  non-resident  had  an  agent  in 
Pennsylvania  with  very  broad  powers  to  buy  and  sell  securities, 
in  which  it  was  held  that  the  securities  held  by  the  agent 
were  taxable  in  Pennsylvania.1  It  was  later  pointed  out  that 
this  case  must  rest  on  its  own  peculiar  facts  and  does  not  affect 
the  general  Pennsylvania  doctrine  that  securities  of  a  non-resi- 
dent, though  physically  within  the  state,  are  not  subject  to 
the  inheritance  tax.2  This  does  not  apply  to  tangible  personal 
property  within  the  state.8 

It  is  refreshing  to  find  the  courts  in  at  least  one  state  in- 
sisting that,  if  personal  property  of  residents  held  outside  of  the 
state  is  to  be  taxed  on  the  theory  that  personal  property  follows 
the  domicile  of  the  owner,  the  logical  consequence  of  the  theory  is 
that  personal  property  of  non-residents  within  the  state  is  not 
taxable.4 

A  direct  inheritance  tax  law  passed  in  1897,  and  imposing  a 
uniform  tax  of  2%  on  personal  property  only,  was  held  unconsti- 
tutional.5 

It  is  somewhat  interesting  to  find  that  the  Pennsylvania 
law — which  is  moderate  in  its  demands,  exempts  direct  inherit- 
ances altogether,  and  lets  non-residents  alone — has  produced 
from  $1,000,000  to  SI, 500,000  annually  for  many  years,  a  much 
greater  sum  than  the  inheritance  tax  law  of  any  of  the  other 
states  except  New  York  has  been  realizing. 


1  Lewis's  Estate,  203  Pa.  211. 

2  Shoenberger's  Estate,  221  Pa.  112. 

3  Small's  appeal  151,  Pa.  1. 

4  cf.  Coleman's  Estate  159,  Pa.  231. 

5  Cope's  Estate,  191  Pa.  1. 


32  INHERITANCE  TAXES. 

Some  of  the  most  prominent  railroad  and  industrial 
corporations  in  the  country  are  organized  under  Pennsylvania 
laws,  including: 

Pennsylvania 

Reading 

Lehigh  Valley 

Delaware,  Lacka wanna  &  Western 

Philadelphia  Co. 

Philadelphia  Rapid  Transit 

Pittsburg  Plate  Glass 

Union  Switch  &  Signal 

Westinghouse  Electric 

Westinghouse  Air  Brake 

Westinghouse  Machine 


INHERITANCE  TAXES.  33 


2. 
VIRGINIA. 

The  conservative  influence  of  Pennsylvania  has  extended  to 
the  three  neighboring  states  of  Delaware,  Maryland  and  Virginia. 
These  states  do  not  tax  direct  inheritances  and  do  not  tax  stock 
in  corporations  organized  under  their  laws  that  is  owned  by  non- 
residents. 

Virginia  adopted  a  collateral  inheritance  tax  in  1844.  Its 
last  legislation  was  in  1910. *  The  tax  is  on  collateral  in- 
heritances only,  the  rate  is  uniformly  5%,  and  there  is  no 
amount  exempted.  The  tax  is  not  levied  on  an  inheritance  to 
grandparents,  father,  mother,  husband,  wife,  brother,  sister  or 
lineal  descendant.  Stock  of  Virginia  corporations  owned  by 
non-residents  is  not  taxable.  The  law  has  been  producing  a 
revenue  of  less  than  $30,000  per  year. 

Among  the  more  prominent  corporations  organized  under 
Virginia  laws  are: 

Baltimore  &  Ohio  (also  Md.) 
Chesapeake  &  Ohio 
Norfolk  &  Western 
Seaboard  Air  Line 
Southern  Railway 


Acts  1910,  Chapter  148,  amending  Acts  1903,  Chapter  148,  Section 
44.  For  constitutionality  of  state  inheritance  tax  see  Miller  vs.  Com.,  27 
Gratt.  109.  Right  of  cities  to  levy  such  tax  is  denied;  Peters  vs.  Lynch- 
burg,  76  Va.  927,  Wytheville  vs.  Johnson,  108  Va.  589. 


34  INHERITANCE  TAXES. 


3. 
MARYLAND. 

Maryland  adopted  a  collateral  inheritance  tax  in  1845. l  The 
present  tax  is  on  collateral  inheritances  only,  the  rate  is  uniformly 
5%,  with  an  exemption  of  $500,  which  applies  to  the  estate  as  a 
whole,  not  to  individual  shares.  No  tax  is  levied  on  an  inheritance 
to  father,  mother,  husband,  wife,  child  or  lineal  descendant.2 

It  would  seem  that  Maryland  formerly  attempted  to  tax 
shares  of  Maryland  corporations  owned  by  non-residents,  but 
they  are  not  now  considered  taxable.  Securities  of  a  non- 
resident deposited  in  Maryland  for  safe  keeping  are  taxable.8 
This  tax  has  been  producing  between  $100,000  and  $150,000 
annually. 

Among  the  more  prominent  corporations  organized  under 
the  laws  of  Maryland  are: 

Baltimore  &  Ohio  (also  Va.) 
Consolidation  Coal 
Northern  Central  Railway  (also  Pa.) 
Western  Marvland 


'For  constitutionality  see  Tyson  vs.  State,  28  Md.  577. 
'Public  General  Laws  (1904)  Section  117  as  amended  by  Chapter  695, 
Laws  of  1908. 

"State  vs.  Dalrymple,  70  Md.  294. 


INHERITANCE  TAXES.  35 

• 

4. 

DELAWARE. 

Delaware  adopted  a  collateral  inheritance  tax  in  1869. 
In  1883  its  application  was  limited  to  strangers  in  blood.  In 
1909  the  following  schedule  was  adopted:1 

Direct   inheritances exempt 

(to  father,  mother,  grand- 
parents, husband,  wife, 
child,  adopted  child  or  lineal 
descendant) 

Brother,  sister,  and  descendant 

of  brother  or  sister 1% 

Brother  or  sister  of  father  or 
mother  and  their  descend- 
ants   2% 

Brother  or  sister  of  grandfather 
or  grandmother  and  their 
descendants  3% 

More  distant  collateral  relations 

and  strangers  in  blood 5% 

The  exemption  is  $500  and  applies  to  individual  shares. 
No  tax  is  claimed  on  stock  of  Delaware  corporations  owned  by 
non-residents.  Delaware  has  been  realizing  almost  nothing 
from  its  inheritance  tax. 

Among  the  more  prominent  corporations  organized  under 
the  laws  of  Delaware  are: 

American  Pneumatic 

Consolidated  Cotton  Duck 

Crex  Carpet 

Giroux 

Miami 

Shannon 


of  1909,  Chapter  225. 


36  INHERITANCE  TAXES. 

• 
5. 

OHIO. 

Ohio  imposed  a  collateral  inheritance  tax  in  1893.  In 
1894  it  was  the  first  s.tate  to  tax  direct  inheritances,  and  was  also 
the  first  state  to  adopt  rates  increasing  progressively  accord- 
ing to  the  size  of  the  estate.  The  act  was  held  unconstitutional 
in  1895,  on  account  of  the  progressive  feature,  and  because  it 
was  not  provided  that  the  exemption  ($20,000)  should  be  de- 
ducted from  all  estates  exceeding  that  amount.1  This  decision 
has  not  been  generally  followed  in  other  jurisdictions. 

In  1904  a  uniform  tax  of  2%  was  imposed  on  direct  in- 
heritances with  an  exemption  of  $300.  This  was  repealed  in  1906. 

At  present  collateral  inheritances  only  are  taxed.  The  rate 
is  uniformly  5%  and  the  exemption  is  $200  which  applies  to  the 
estate  as  a  whole,  not  to  the  individual  shares.  The  inheritances 
which  are  altogether  exempt  are  those  to  father,  mother,  hus- 
band, wife,  brother,  sister,  niece,  nephew,  lineal  descendant, 
adopted  child  and  its  lineal  descendant,  wife  or  widow  of  son  and 
husband  of  daughter.2 

Stock  in  an  Ohio  corporation  owned  by  a  non-resident  is 
not  taxed. 

Among  the  more  prominent  corporations  organized  under  the 
laws  of  Ohio  are: 

Cleveland,  Cinn.,  Chic.  &  St.  L.  (also  Ind.) 

Hocking  Coal 

Hocking  Valley 

Kanawha  &  Michigan  (also  W.  Va.) 

Lake  Shore  (also  111.,  Ind.,  Mich.,  N.  Y.,  Pa.) 

Northern  Ohio  Tract. 

Toledo  Ry.&Lt. 

Wheeling  &  Lake  Erie 

Wabash  (also  111.,  Ind.,  Mich.  &  Mo.) 


»State  vs.  Ferris,  53  Ohio  State  314. 
"General  Code  1910,  Section  5331. 


INHERITANCE  TAXES.  37 

6. 
MISSOURI. 

Missouri's  first  attempt  at  a  collateral  inheritance  tax  in 
1895  was  held  unconstitutional.1  A  second  attempt  in  1899 
fared  better.2 

Collateral  inheritances  only  are  taxed.  The  rate  is  uni- 
formly 5%  and  there  is  no  amount  exempted.  The  inheritances 
exempt  are  those  to  father,  mother,  husband,  wife,  lineal  de- 
scendant and  adopted  child.8 

This  law  has  produced  from  $200,000  to  $400,000  annually. 
An  interesting  detail  is  that  the  proceeds  of  the  tax  are  devoted 
to  the  support  of  the  University  of  Missouri,  providing  a  sort  of 
compulsory  bequest  for  higher  education  from  every  estate. 

Missouri  taxes  stock  of  a  Missouri  corporation  owned  by  a 
non-resident; 4  it  taxes  stock  of  a  corporation  organized  elsewhere 
owning  property  in  Missouri,  and  it  apparently  taxes  stock  of  a 
foreign  corporation  owned  by  a  non-resident  if  the  stock  certi- 
ficate is  kept  in  Missouri. 

Among  the  more  prominent  corporations  organized  under 
the  laws  of  Missouri  are:  , 

Kansas  City  Southern 

Laclede  Gas 

Missouri  Pacific  (also  Kan.,  Neb.) 

St.  Louis  &  San  Francisco 

Wabash  (also  111.,  Ind.,  Mich.  &  Ohio) 


*State  vs.  Switzler,  143  Mo.  287. 

2State  vs.  Henderson,  160  Mo.  190. 

3Revised  Stats.  1909,  Chapter  2,  Article  14,  Sections  309-331. 

4Conflicting  information  is  at  hand  on  this  point. 


38  INHERITANCE  TAXES. 

7. 

MASSACHUSETTS. 
ALL    INHERITANCES    TAXED — NON-RESIDENTS     REACHED — AN 

ATTEMPT  To  AVOID  DOUBLE  TAXATION. 
Massachusetts  first  adopted    a  collateral  inheritance  tax  in 
1891, '  and  a  direct  inheritance  tax  in  1907,  which  applies  to  es- 
tates of  persons  who  have  died  since  Sept.  1 ,  1907. 

The  following  taxes  are  imposed : * 
Direct  inheritances, 

Inheritances  to  husband,  wife,  father,  mother, 
child  and  adopted  child. 

Oto    $50,000    1%  on  entire  amount 
$50,000  to  $100,000  1J%  " 
Over  $100,000    2%     " 

Exemption  $10,000* 

Inheritances  to  other  direct  heirs  including 
lineal  ascendants  (except  parents),  lineal 
descendants  (except  children),  lineal  descend- 
ant of  adopted  child,  wife  or  widow  of  son, 
husband  of  daughter. 

0  to    $50,000    1%  on  entire  amount 
$50,000  to  $100,000  \\%  " 
Over  $100 ,000   2%     " 

Exemption  $1000* 
Collateral  inheritances, 

Inheritances  to  brother,  sister,  nephew,  niece. 

0  to   $25,000    3%  on  entire  amount 
$25,000  to  $100,000  4%     " 
Over  $100,000   5%     " 

Exemption  $1000* 
All  other  inheritances, 
Taxed  uniformly  5% 

Exemption  $1000* 

*Exemptions  apply  to  each  individual  inheritance  and  not 
to  the  estate  as  a  whole.  In  the  case  of  a  non-resident,  as  has 
already  been  noted,  the  inheritance  is  taxable  if  the  entire  amount 
of  the  share  passing  is  greater  than  the  amount  exempted, 
though  the  portion  of  the  share  in  Massachusetts  is  less  than 
the  exempted  amount;  but  in  such  case  the  tax  is  levied  only 


JFor  constitutionality  see  Minot  vs.  Winthrop,  162  Mass.  113;  Crocker 
vs.  Shaw,  174  Mass.  266. 

2Acts  of  1909  chap.  490  part  IV.  See  also  Acts  of  1909  chap.  266, 
268,  527,  Acts  of  1910  chap.  481, 


INHERITANCE  TAXES.  39 

on  the  portion  of  the  inheritance  subject  to  Massachusetts 
jurisdiction.  For  example,  a  non-resident  leaves  a  child  $100,- 
000,  of  which  $5000  is  stock  in  a  Massachusetts  corporation. 
Massachusetts  taxes  this  $50,  1%  on  $5000. 

It  should  be  noted  that  the  tax,  where  levied,  is  on  the  full 
amount  without  deducting  the  exemption.  Thus  a  bequest 
of  $10,000  by  a  resident  to  a  child  would  be  taxed  nothing,  a 
bequest  of  $20,000  would  be  taxed  $200,  1%  on  the  full  $20,000. 
But  the  tax  must  not  reduce  the  inheritance  below  the  exempted 
figure,  so  an  inheritance  of  $10,001  would  pay  only  $1. 

Among  the  points  that  have  been  decided  by  the  Massa- 
chusetts Supreme  Court  are  the  following: 

Stocks  in  Massachusetts  corporations  and  in  national  banks 
doing  business  in  Massachusetts,  owned  by  a  non-resident,  are 
subject  to  the  tax.1 

But  if  a  non-resident  owns  stock  in  a  railroad  company 
incorporated  in  Massachusetts  and  other  states,  the  tax  is 
based  only  on  the  proportionate  amount  of  the  line  within 
Massachusetts.2  This  also  applies  to  street  railway,  telephone 
and  telegraph  companies  incorporated  in  Massachusetts  and 
other  states. 

The  following  property  of  a  non-resident  kept  in  Massa- 
chusetts is  subject  to  the  tax;  cash,  bonds  of  corporations  of 
other  states,  Ohio  Municipal  Bonds,  New  Hampshire  State 
Bonds,  United  States  Government  Bonds.8 

Bonds  of  Massachusetts  corporations,  owned  by  a  non- 
resident, if  kept  within  the  state  are  taxed;  if  kept  outside  the 
state  are  not  taxed.  Stocks  of  foreign  corporations  kept  in  Massa- 
chusetts by  a  non-resident  are  not  taxed. 


JGreves  v.  Shaw,  173  Mass.  205. 

2Kingsbury  v.  Chapin,  196  Mass.  533.     See  also,  Matter  of    Cooley, 
186  N.  Y.  220;  Moody  vs.  Shaw,  173  Mass.  375. 
8Callahan  v.  Woodbridge,  171  Mass.  595. 


40  INHERITANCE  TAXES. 

Shares  in  voluntary  associations  like  Massachusetts  Gas 
and  Massachusetts  Electric,  and  also  shares  in  local  real  estate 
trusts,  have  been  regarded  by  the  tax  commissioner  as  standing 
on  the  same  footing  as  Massachusetts  corporations,  and  have 
been  taxed  whether  owned  by  a  resident  or  non-resident.  The 
right  to  collect  such  a  tax  on  real  estate  trust  shares  is  being 
contested  in  a  case  now  pending  in  the  Supreme  Court. 

A  corporation  that  transfers  stock,  and  a  person  or  corpo- 
ration that  delivers  over  securities  of  a  non-resident  estate 
before  the  tax  is  paid,  are  made  liable  for  the  tax. 

It  is  the  practice  of  the  tax  commissioner's  office  to  require 
an  inventory  of  the  entire  estate  of  a  non-resident,  as  the  com- 
missioner deems  it  necessary  for  a  proper  computation  of  the 
tax. 

Massachusetts  is  one  of  the  very  few  states  that  have 
made  any  attempt  to  avoid  double  taxation. 

If  personal  property  of  a  deceased  resident,  which  is  out- 
side the  state,  has  been  taxed  in  other  states — and  this  includes 
stock  in  foreign  corporations,  whether  the  certificate  is  actually 
kept  in  Massachusetts  or  not — Massachusetts  will  not  tax  it, 
unless  the  outside  tax  is  less  than  the  Massachusetts  tax,  and 
then  Massachusetts  collects  only  the  difference.1  For  instance, 
a  Massachusetts  estate  owns  stock  in  American  Telephone  which 
is  incorporated  only  in  New  York.  As  the  estate  pays  a  tax 
on  this  to  New  York,  Massachusetts  does  not  tax  it.  This  ex- 
emption has  been  construed  not  to  apply  to  shares  owned  by 
a  resident,  in  a  company  incorporated  in  Massachusetts  and 
other  states.  A  bill  has  been  introduced  in  the  legislature  now 
sitting  to  extend  the  exemption  to  such  a  case.2 

The  result  is  that  at  present,  so  far  as  the  inheritance  tax 
is  concerned,  for  a  Massachusetts  investor,  stocks  in  Massachu- 


1  cf.  Frothingham  vs.  Shaw,  175  Mass.  59. 
4    This  bill  was  passed  at  the  1911  session. 


INHERITANCE  TAXES.  41 

setts  corporations  are  most  desirable,  stocks  in  corporations  of 
states  whose  taxes  are  no  heavier  than  Massachusetts  are  a 
second  choice,  while  stocks  in  corporations  of  states  whose  taxes 
are  heavier  than  Massachusetts,  are  less  desirable. 

The  attempt  to  avoid  double  taxation  in  the  case  of  non- 
residents has  as  yet  been  of  little  practical  value.  There  is 
a  reciprocal  clause  in  favor  of  non-residents  owning  stocks 
in  Massachusetts  corporations  which  provides  that  such 
itock  shall  not  be  taxed  (except  for  the  difference  if  Massa- 
chusetts rates  are  higher)  if  owned  by  a  resident  of  a  state  which 
extends  similar  courtesies  to  residents  of  Massachusetts. 
There  are  only  five  other  states  to  which  by  any  possibility 
this  could  apply.  It  has  been  ruled  that  residents  of  Maine 
are  entitled  to  the  exemption;  the  same  ruling  is  likely  to 
be  made  when  occasion  arises  as  to  Vermont  and  Kansas; 
the  attorney  general  has  ruled  that  the  retaliative  provision 
in  the  Connecticut  law  does  not  satisfy  the  reciprocal  require" 
ments,  and  it  is  probable  that  the  same  ruling  would  be  made 
as  to  West  Virginia. 

The  receipts  under  the  old  collateral  inheritance  tax  (ap- 
plying only  to  estates  of  persons  who  died  before  Sept.  1,  1907) 
reached  a  maximum  in  1908.  As  the  new  law  allows  two  years 
in  which  to  pay  the  tax,  its  full  effect  as  a  revenue  producer 
was  not  realized  until  1910. 

The  following  have  been  the  receipts,  including  interest, 
under  both  laws,  for  the  last  four  years: 

Under  old  New  direct 

collat.  tax  andcollat. 

(persons  dying  (persons  dying 

before  Sept.  since  Sept. 

1,1907)  1,1907) 

1910    $252,265  $1,470,365 

1909    563,718  908,685 

1908    906,365  357,655 

1907    796,075  0 


42 


INHERITANCE  TAXES. 


Among  the  numerous  companies  organized  under    the  laws 
of  Massachusetts  may  be  mentioned  the  following: 
Listed  on  the  Boston  Stock  Exchange: 


Boston  &  Albany  (also  N.  Y.) 
Boston  Elevated 
Boston  &  Lowell 
Bos.&Me.  (also  N.  H.&Me.) 
Boston&Northern  Street  Ry. 
Boston  &  Providence 
Bos.,  Revere  Beach  &  Lynn 
Conn.  River  (also  N.  H.) 
Edison  Electric 


Fitchburg(alsoN.Y.,N.H.&  H.) 

Mass.  Electric* 

Mass.  Gas* 

New  England  Cotton  Yarn 

N.YN.H.&H.  (also  Conn&R.I.) 

Old  Colony  Railroad 

Old  Colony  Street  Ry. 

Prov.  &  Wor.  (also  R.  I.) 

West  End  Street  Railway 


*Voluntary  associations,  not  corporations. 


Mill,  manufacturing  and  miscellaneous  stocks: 


Acushnet  Mills 
American  Glue 
Arlington  Mills 
Ark wright  Mills 
Barnaby  Mfg. 
Barnard  Mfg. 
Berkshire  Mfg. 
Bigelow  Carpet 
Boott  Mills 
Borden  Mfg. 
Boston  Belting 
Boston  Duck 
Boston  Wharf 
Boston  Woven  Hose 
Butler  Mill 
Chapman  Valve 
Chicopee  Mfg. 
Cornell  Mills 
Dartmouth  Mfg. 
Davis  Mills 
D wight  Mfg. 
Essex  Co. 
Everett  Mills 
Flint  Mills 
Fisher  Mfg. 

Fore  River  Shipbuilding 
Granite  Mills 
Grinnell  Mfg. 


Lancaster  Mills 
Laurel  Lake  Mills 
Lawrence  Mfg. 
Lowell  Bleachery 
Luther  Mfg. 
Lyman  Mills 
Manomet  Mills 
Mass.  Cotton  Mills 
Mass.  Mills  in  Ga. 
Maverick  Mills 
W.  H.  McElwain     Co. 
Merrimac  Mfg. 
Middlesex  Co. 
Narragansett  Mills 
Nashawena  Mills 
Naumkeag  Steam  Cotton 
Nonquitt  Spinning 
Pacific  Mills 
Parker  Mills 
Pierce  Mfg. 
Plymouth  Cordage 
Pocasset  Mfg. 
Renfrew  Mfg. 
Sagamore  Mfg. 
Shaw  Stocking 
Seaconnet  Mills 
Stevens  Mfg. 
Suncook  Mills 


INHERITANCE  TAXES. 


43 


Gosnold  Mills 
Hamilton  Mfg. 
Hamilton  Woolen 
Hargraves  Mills 
Harmony  Mills 
Hood  Rubber 


Tecumseh  Mills 
Thorndike  Co. 
Tremont  &  Suffolk  Mills 
Union  Cotton  Mfg. 
Wamsutta  Mills 
Whitman  Mills 


Also  all  street  railway,  electric  light  and  gas  companies  doing 
business  in  Massachusetts. 


44  INHERITANCE  TAXES. 

8. 

NEW  YORK. 
A  STATE  WHICH  HAS  RECENTLY  TAKEN  AN  EXTREME  POSITION. 

New  York  has  had  a  collateral  inheritance  tax  since  1885,  a 
direct  inheritance  tax  on  personal  property  since  1891  and  on 
real  estate  since  1903. l  Until  1910  the  rate  was  1%  on  direct  in- 
heritances, and  5%  on  collateral  inheritances.  The  present  much 
criticised  law  took  effect  July  11,  1910,  and  introduced  gradu- 
ated rates  running  up  to  25%. 

It  provides  for  the  following  taxes: a 

Inheritances  to  father,  mother,  widow,  minor  child.8 
First  $5,000  exempt 

Excess  over  $5,000  up  to  $25,000  1% 
Excess  over  $25,000  up  to  $100,000  2% 
Excess  over  $100,000  up  to  $500,000  3% 
Excess  over  $500,000  up  to  $1,000,000  4% 
Excess  over  $1 ,000,000  5% 

Inheritances  to  all  other  direct  heirs  including  hus- 
band, adult  child,  brother,  sister,  wife  or  widow 
of  son,  husband  of  daughter,  adopted  or  mutu- 
ally acknowledged   child   and   lineal  descendant.8 
Tax  is  the  same  except  that  the  exemption 
is  only  on  the  first  $500. 

Inheritances  to  all  others:8 

First  $100  exempt 

Excess  over  $100  up  to       $25,000      5% 

Excess  over  $25,000  up  to  $100,000  10% 
Excess  over  $100,000  up  to  $500,000  15% 
Excess  over  $500,000  up  to  $1 ,000,000  20% 
Excess  o  ver  $  1 ,000 ,000  25% 

'For  constitutionality  see  Matter  of  McPherson,  104  N.  Y.  306;  Matter 
of  Keeney,  194  N.  Y.  281;  Orr  vs.  Oilman,  183  U.  S.  278;  Beers  vs.  Glynn, 
211  U.  S.  477. 

*Law8  of  1909,  Chap.  62,  Sect.  220-245  as  amended  by  Laws  of  1910, 
Chap.  600  and  706. 

"This  is  the  interpretation  of  the  law  as  made  by  the  Comptroller's  office, 
and  followed  by  many  Surrogates.  Other  Surrogates  rule  that  if  the  legacy 
exceeds  the  exempted  amount,  the  entire  legacy  is  taxable  without  deducting 
the  exemption.  See  Matter  of  Mason,  126  N.  Y.  Supplement  998.  See 
also  Matter  of  Jourdan,  70  Misc.  159  for  a  slightly  different  interpretation  of 
the  whole  table. 


INHERITANCE  TAXES.  45 

The  exemptions  apply  to  each  inheritance  rather  than  to 
the  estate  as  a  whole.  In  the  case  of  a  non-resident,  apparently, 
if  the  New  York  portion  of  the  inheritance  is  less  than  the 
exempted  amount,  the  inheritance  is  not  taxable. 

The  New  York  courts  have  laid  down  the  rules  that  have 
been  generally  followed  in  the  states  that  have  taken  a  radical 
position.  Among  the  important  points  that  have  been  decided 
are: 

Stocks  in  New  York  corporations  held  outside  the  state  by  a 
non-resident  are  taxable;1  but  the  same  case  holds  that  bonds 
of  a  New  York  corporation  so  held  are  not  taxable. 

Bonds  of  either  New  York  or  foreign  corporations  and  stock 
of  New  York  corporations,  owned  by  a  non-resident  and  kept 
in  a  New  York  safe  deposit  vault  are  taxable,  but  stocks  of  for- 
eign corporations  so  kept  are  not  taxable.2  (By  a  foreign  cor- 
poration is  meant  a  corporation  organized  under  the  laws  of  any 
other  jurisdiction.)  United  States  bonds  so  kept  are  taxable.3 

A  safe  deposit  company  or  any  person  or  corporation  that 
delivers  over  or  transfers  securities  of  a  non-resident  without 
notifying  the  tax  authorities,  is  not  only  made  liable  for  the 
tax,  but  is  subject  to  heavy  penalty  as  well. 

A  deposit  by  a  non-resident  in  a  New  York  trust  company  or 
bank  is  taxable.4  In  the  Blackstone  case  the  estate  had  already 
paid  a  tax  on  the  deposit  to  Illinois  where  the  deceased  lived. 
The  case  was  carried  to  the  United  States  Supreme  Court  and 
resulted  in  the  decision  already  referred  to,  that  the  Constitution 
does  not  prohibit  such  double  taxation.5 


Matter  of  Bronson,  150  N.  Y.  1. 

2Matter  of  Romaine,  127  N.  Y.  80;  Matter  of  Whiting,  150  N.  Y. 
27;  Matter  of  Morgan,  150  N.  Y.  35;  Matter  of  Palmer,  183  N.  Y.  238. 

8Matter  of  Plummer,  161  N.  Y.  631;  affirmed  in  Plummer  vs.  Coler, 
178  U.  S.  115. 

4Matter  of  Houdayer,  150  N.  Y.  37;  Matter  of  Blackstone,  171  N.  Y. 
682;  Matter  of  Daly,  182  N.  Y.  524. 

5Blackstone  vs.  Miller,  188  U.  S.  189. 


46  INHERITANCE  TAXES. 

It  is  the  usual  practice  to  require  an  inventory  of  the  entire 
property  of  a  non-resident.  The  Comptroller's  Office  states  that 
this  is  ''only  for  the  purpose  of  seeing  that  the  stocks  of  New  York 
corporations  are  fully  set  forth,  and  for  the  purpose  of  prorating 
the  property  in  this  state  in  the  payment  of  legacies  under  the 
decedent's  will  or  the  interstate  law  of  decedent's  domicile." 
That  is  to  say,  for  the  purpose  of  preventing  non-resident  execu- 
tors from  satisfying  only  tax-exempt  inheritances  out  of  the  New 
York  portion  of  the  property. 

New  York  is  not  one  of  the  states  that  tries  to  collect  a  tax 
on  the  shares  of  corporations  not  organized  under  its  laws,  but 
owning  property  in  the  state.  In  the  case  of  corporations  organ- 
ized under  New  York  laws  and  the  laws  of  other  states  as  well, 
such  as  Boston  &  Albany,  the  stock  is  taxed  on  the  proportionate 
value  of  the  property  in  New  York.1 

The  immoderate  zeal  displayed  by  New  York  in  trying  to  get 
at  non-resident  estates  can  be  illustrated  by  mentioning  one  line 
of  attack.  Administrators  in  other  states,  very  soon  after  their 
appointment,  are  likely  to  receive  a  letter  from  a  New  York 
attorney,  reciting  that  he  has  been  designated  for  the  purpose 
of  instituting  inheritance  tax  proceedings  against  the  estate, 
demanding  that  a  complete  inventory  of  the  estate  be  sent  to 
him,  and  suggesting  a  penalty  if  it  is  not  done  promptly. 

There  seems  to  be  a  very  strong  sentiment  in  New  York 
that  this  drastic  law  is  a  mistake.  Farmers'  organizations  are 
protesting  against  the  heavy  burden  it  places  on  small  estates. 
The  Chamber  of  Commerce  has  adopted  resolutions  favoring  the 
amendment  or  repeal  of  the  law.  The  president  of  the  American 
Chamber  of  Commerce  in  Paris  has  written  saying:  "We 
know  many  foreigners  who  have  recently  sold  their  securities 
and  withdrawn  their  balances  from  New  York  to  avoid  payment 


Walter  of  Cooley,  186  N.  Y.  220;  Matter  of  Thayer,  193  N.  Y.  430. 


INHERITANCE  TAXES.  47 

of  new  heavy  legacy  taxes  in  case  of  their  death."  A  Surrogate 
in  a  public  address  has  referred  to  this  law  as  "a  policy  of 
greed"  and  declared  that  because  of  it  millions  would  be  driven 
out  of  the  state  of  New  York. 

The  New  York  Safe  Deposit  Association  has  adopted  a 
resolution  petitioning  the  legislature  to  repeal  the  statute  and 
calls  upon  other  bankers'  and  merchants'  organizations  to  join 
in  the  appeal.  They  claim  that  the  new  inheritance  tax  law  is 
driving  personal  securities  out  of  their  vaults  and  outside  the 
state  "by  the  wagonload." 

Clark  Williams,  state  comptroller,  in  his  current  report 
to  the  legislature,  says  that  the  recently  enacted  amendments 
to  the  inheritance  tax  law  are  forcing  men  of  wealth  to  take  up 
their  residence  in  other  states.  He  says:  "Evidence  is  not 
lacking  that  the  exodus  has  already  begun.  Instances  have 
lately  been  brought  to  my  attention  in  which  foreign  capital 
seeking  investment  in  New  York,  through  banking  houses, 
which  by  reason  of  their  connection  would,  under  normal  condi- 
tions, have  invested  it  in  the  stocks  of  domestic  corporations, 
has,  by  reason  of  the  hardship  of  this  law,  been  diverted  from 
the  natural  course  and  invested  in  the  stocks  of  corporations 
domiciled  in  other  states  .  No  argument  is  needed  to  show  the 
effect  which  a  continuance  of  the  present  policy  must  have 
upon  the  corporations  domiciled  here." 

The  new  amendments  cannot  be  justified  on  the  plea  of  need 
of  addition  revenue.  The  previous  law,  though  obnoxious 
in  its  application  to  non-residents,  had  the  merit  of  reasonable 
rates  and  was  an  important  factor  in  eliminating  direct  property 
taxes  for  state  purposes.  It  produced  almost  $7,000,000  in 
1909.  In  1910  over  $8, 200,000  was  realized.  The  increase 
is  not  attributed  by  the  comptroller  to  the  new  law,  but  to  the 
collection  of  $1,908,000  from  six  unusually  large  estates.  The 


48  INHERITANCE  TAXES. 

comptroller  apparently  is  inclined  to  believe  that  the  new  law 
may  actually  reduce  the  revenue  by  driving  large  estates  out 
of  New  York. 

The  present  law  may  tax  a  distant  relative  or  a  stranger 
2  %,  and  this  too,  although  any  one  of  six  other  states  may 
have  already  collected  15%. 

Its  effect  upon  as  near  a  relative  as  a  nephew  may  be  almost 
as  bad.  Suppose  a  resident  of  New  Jersey  has  $2,000,000  of 
registered  bonds  of  a  Kansas  corporation  in  a  safe  deposit  vault 
in  New  York  City.  He  dies  and  leaves  this  to  his  nephew,  also  a 
New  Jersey  resident.  The  New  York  tax  (computed  on  a  gradu- 
ated scale  with  a  maximum  of  25%)  is  $418,745;  the  New 
Jersey  tax  (5%  straight)  is  $100,000;  the  Kansas  tax  (from 
3%  to  12£%  graduated)  is  $233,220,  a  total  of  $751,965,  or 
over  37 £%  of  the  inheritance. 

Then  carry  this  a  step  further.  Suppose  the  legatee  dies 
within  a  few  months  before  there  has  been  any  change  in  the 
location  of  the  bonds  and  he  in  turn  leaves  the  property,  or 
what  there  is  left  of  it,  say  $1,250,000  for  round  figures,  to  his 
nephew.  The  New  York  tax  on  this  is  $231 ,245;  the  New  Jersey 
tax  $62,500  and  the  Kansas  tax  $139,470,  a  total  of  $433,215, 
bringing  the  estate  down  to  only  a  little  over  $800,000  against 
$2,000,000  a  few  months  before.  Other  states  might  well  be 
substituted  for  New  Jersey  and  Kansas  without  materially 
changing  this  result. 

In  1897  Governor  Black  refused  to  sign  an  inheritance  tax 
bill  with  a  maximum  rate  of  15%,  because  of  the  hardship  in  the 
case  of  deaths  in  quick  succession  in  the  same  family,  because  it 
would  tend  to  drive  away  capital,  and  because  the  rates  proposed 
were  not  uniform  or  fair.  The  more  hat  publicity  is  given  to 
this  recent  enactment,  the  less  it  is  liked.  It  wi  1  not  be  sur- 
prising if  it  is  substantially  modified. 


INHERITANCE  TAXES. 


49 


Among   the   many   prominent    companies   organized   under 
New  York  laws  are: 


Adams  Express* 

American  Express* 

American  Telephone 

Brooklyn  Rapid  Transit 

Brooklyn  Union  Gas 

Buffalo,  Rochester  &  Pittsburgf 

Butterick  Co. 

Central  &  South  Am.  Tel. 

Consolidated  Gas 

Delaware  &  Hudson 

Erie 

General  Chemical 

General  Electric 

Interborough-Metropolitan 

International  Paper 


Lackawanna  Steel 

Lake  ShoreJ 

Long  Island  Railroad 

Manhattan  Elevated 

Mergenthaler  Linotype 

New  England  Telephone 

New  York  Central 

New  York,  Ontario  &  Western 

Pacific  Mail 

Sears-Roebuck 

Singer  Manufacturing  Co. 

Third  Avenue 

United  Cigar  Stores 

United  States  Express* 


*The  express  companies  are  not  corporations  but  joint  stock  associa- 
tions under  New  York  laws., 

fBuffalo,  Rochester  &  Pittsburg — also  in  Pennsylvania. 

JLake  Shore — also  in  Illinois,  Indiana,  Ohio,  Michigan,  Pennsylvania. 


NOTE. — Governor  Dix  in  a  special  message  to  the  legislature  in  March, 
1911,  recommended  the  repeal  of  this  law.  A  bill  has  been  introduced  in 
accordance  with  this  recommendation  following  the  line  of  the  model  bill 
of  the  International  Tax  Association  referred  to  later  (page  113  infra). 


50  INHERITANCE  TAXES. 

9. 

OKLAHOMA. 
TAXATION  THAT  Is  CONFISCATION — A  STARTLING    POSSIBILITY. 

Oklahoma  did  not  wait  long  after  its  admittance  to  the 
Union  before  adopting  an  inheritance  tax  law.  This  law  was 
enacted  at  the  1907-8' session  of  the  Oklahoma  legislature  and 
will  not  disappoint  those  who  have  learned  to  look  to  Oklahoma 
for  radical  and  complicated  legislation.  The  rather  startling, 
though  perhaps  not  wholly  surprising  feature  of  the  law,  in  view 
of  what  supposedly  conservative  states  have  done,  is  that  there 
is  a  progressive  feature  which  results  in  the  confiscation  of  all 
in  excess  of  certain  amounts,  and  not  very  large  amounts  at 
that. 

The  scheme  of  taxation  may  be  briefly  summarized  as 
follows: l 

Inheritance  to  widow: 

First  $10,000    exempt 

Excess  over  $10,000  up  to  $15,000 1% 

Excess  over  $15,000 1-125  of  1%  in- 
crease in  rate  for  every  $100 

Excess  over  $1 ,252,500 100% 

Inheritances  to  husband,  lineal  descendant,  lineal 
ancestor,  adopted  or  mutually  acknowledged 
child,  and  lineal  descendant  of  such  child: 

First  $5,000    exempt 

Excess  over  $5000  up  to  $10,000    1% 

Excess  over  $10,000 1-125  of   1%  in- 
crease in  rate  for  every  $100 

Excess  over  $1,247,500 100% 

Inheritances    to    brother,    sister,    descendant    of 
brother  or  sister,  wife  or  widow  of  son,  husband 
of  daughter: 

First  $500 exempt 

Excess  over  $500  up  to  $2500 l£% 

Excess    over    $2500    1-50    of    1%    in- 
crease in  rate  for  every  $100 
Excess  over  $495,000 100% 


'Oklahoma  Compiled  Laws  1909,  Page  1549,  Article  14,  Chapter   98; 
session  laws  1907-8,  Page  733,  Article  11,  Chapter  81. 


INHERITANCE  TAXES.  51 

Inheritances    to    brother    or    sister    of    father    or 
mother  or  their  descendants: 

First  $250 exempt 

Excess  over  $250  up  to  $2250 3% 

Excess    over  $2250 1-50    of    1%    in- 
crease in  rate  for  every  $100 
Excess  over  $487,250 100% 

Inheritances   to   brother  or  sister  of   grandfather 
or  grandmother  or  their  descendants: 

First  $150 exempt 

Excess  over  $150  up  to  $650 4% 

Excess   over  $650 1-10   of    1%   in- 
crease in  rate  for  every  $100 
Excess  over  $96,650 100% 

All  other  inheritances: 

First  $100 exempt 

Excess  over  $100  up  to  $600    5% 

Excess  over  $600 1-10  of  1%  in- 
crease in  rate  for  every  $100 
Excess  over  $95,600    100% 

Exemptions  apply  to  each  individual  inheritance  and  not 
to  the  estate  as  a  whole. 

We  hesitate  to  suggest  that  under  a  literal  reading  of  the 
statute  the  rate  of  tax  continues  to  increase  even  after  100%  is 
reached . 

Oklahoma  taxes  both  stock  and  registered  bonds  of  Okla- 
homa corporations  owned  by  non-residents  and  the  corporation 
itself  is  responsible  for  the  tax  if  it  transfers  securities  before  the 
tax  is  paid. 

This  remarkable  statute  suggests  interesting  possibilities- 
Suppose  a  rich  New  York  resident  shows  his  appreciation  of 
his  best  friend  by  naming  him  his  executor,  and  leaves  him  in 
addition  a  handsome  legacy  of  $2,000,000  worth  of  stock  in  an 
Oklahoma  corporation.  The  executor  is  not  familiar  with  the 
gyrations  of  inheritance  tax  laws,  and  as  he  wishes  to  receive 
his  dividends,  he  sends  along  the  stock  for  transfer.  Some  one 
has  borrowed  our  table  of  logarithms  and  our  higher  mathe- 
matics are  a  little  rusty,  but  under  this  handicap  we  figure 


52  INHERITANCE  TAXES. 

that  $1,951,930  is  a  very  close  approximation  to  the  Oklahoma 
tax  on  this  legacy. 

The  exhilarating  feature  of  the  situation  is  not  that  he  has 
only  $48,070  of  the  $2,000,000  left  when  Oklahoma  is  through, 
but  is  that  a  tax  of  $418,745  is  still  due  on  the  legacy  to  the  state 
of  New  York,  and  the  executor  is  personally  responsible  for  the 
payment  of  the  en  tire' amount! 

This  act  has  yet  to  be  passed  upon  by  the  Oklahoma  Supreme 
Court; — a  court  which,  it  may  be  noted,  has  already  shown  much 
sanity.  It  is  hard  to  believe  that  the  act  could  be  sustained 
even  under  the  remarkable  constitution  of  this  state. 

It  may  not  be  surprising  to  learn  that  no  corporation  of 
really  national  importance  has  organized  in  Oklahoma.  Among 
the  prominent  railroads  in  the  state  are  Atchison;  Kansas  City; 
Mexico  &  Orient;  Kansas  City  Southern;  Missouri,  Kansas  & 
Texas;  Rock  Island;  St.  Louis  &  San  Francisco,  but  none  of  them 
are  incorporated  under  the  laws  of  the  state. 

There  is,  however,  a  substantial  amount  of  outside  capital 
invested  within  the  state  in  national  banks,  and  in  state  banks 
and  public  service  corporations  that  are  organized  under  Okla- 
homa laws. 


INHERITANCE  TAXES.  53 

10. 
MAINE. 

Maine  began  to  tax  collateral  inheritances  in  1893  and 
direct  inheritances  in  1909.  The  following  taxes  are  now 
imposed: 

Direct  inheritances, 

Inheritances  to  husband,  wife,  father,  mother, 
child ,  adopted  child : 

Under  $50,000    1% 

$50,000  to  $100,000    l£% 

Over      100,000    2% 

Exemption  $10,000* 

Inheritances  to  lineal  ancestor  (except  parents), 
lineal  descendant  (except  children),  lineal 
descendant  of  adopted  child,  wife  or  widow 
of  son,  husband  of  daughter: 

Under  $50,000    1% 

$50,000  to    100,000    1|% 

Over      100,000    2% 

Exemption  $500* 
Collateral  inheritances, 

Inheritances    to    brother,    sister,    uncle,    aunt, 
nephew,  niece,  cousin: 

Under        $50,000    4% 

$50,000  to  100,000    4i% 

Over      100,000    5% 

Exemption  $500* 
All  other  inheritances. 

Under  $50,000 5% 

$50,000  to    100,000    6% 

Over      100,000    7% 

Exemption  $505* 

Revised  Statutes  Chap.  8.     Sections  69-85,  as  amended    by  laws  of 
1905,  Chapter  124,  and  laws  of  1909  chapters  186  and  187. 

*Exemptions  apply  to  each  individual  inheritance  and  not 
to  the  estate  as  a  whole.1  Probate  Courts  have  charge  of  inheri- 
tance tax  matters.  In  some  of  them  the  tax  is  imposed  on  the 
full  amount  of  the  inheritance;  thus  an  inheritance  of  $40,000 
to  a  child  is  taxed  $400,  1%  on  the  whole  $40,000;  but  in  other 


iState  vs.  Hamlin,  86  Me.  495. 


54  INHERITANCE  TAXES. 

Probate  Courts  the  tax  is  collected  on  the  excess  over  the  ex- 
emption only,  and  in  such  courts  the  tax  would  be  only  $300, 
1%  on  the  excess  over  $10,000.  The  same  uncertainty  prevails 
in  the  case  of  large  inheritances,  as  to  whether  they  are  taxable 
at  the  increased  rate  only,  on  the  excess  over  the  minimum  figure 
or  on  the  entire  inheritance.  There  has  been  as  yet  no  authorita- 
tive decision. 

Maine  has  taken  an  advanced  position  in  trying  to  avoid 
double  taxation. 

Property  of  a  resident  situated  outside  the  state,  if  taxed 
by  another  state  or  country,  is  taxed  in  Maine  only  for  the  differ- 
ence if  the  Maine  tax  is  the  greater. 

Property  of  a  non-resident  within  the  jurisdiction  of  Maine, 
if  subject  to  a  tax  in  his  home  state  or  country,  pays  to  Maine 
only  so  much  as  the  Maine  tax  may  be  in  excess  of  the  tax  in 
the  place  of  residence. 

Maine  is  taxing  stock  of  Maine  corporations  owned  by  non- 
residents, but  the  usual  provision  that  the  corporation  itself 
shall  be  responsible  for  the  tax  if  it  transfers  stock  before  the 
tax  is  paid,  is  wanting  in  the  Maine  laws. 

It  seems  to  be  the  general  practice  in  the  Probate  Courts 
to  tax  Boston  &  Maine  shares  on  their  full  value,  though  the 
company  is  also  incorporated  in  Massachusetts  and  New  Hamp- 
shire, and  only  a  relatively  small  portion  of  its  line  is  in  Maine. 
When  an  authoritative  ruling  is  made  on  this  point,  it  wrill  be 
surprising  if  it  does  not  follow  the  Massachusetts  and  New  York 
practice  of  taxing  the  stock  according  to  the  relative  proportion 
of  the  line  within  the  state. 

The  collateral  inheritance  tax  was  producing  $75,000  to 
$100,000  annually.  The  addition  of  a  tax  on  direct  inheritance  is 
likely  to  increase  this  materially. 


INHERITANCE  TAXES.  55 

Among    the    better    known     companies    organized    under 
Maine  laws  are: 

American  Zinc  Mexican  Tel.  &  Tel. 

Androscoggin  Mills  Nevada  Consolidated 

Arizona  Commercial  Nipissing 

Atlantic,  Gulf  &  W.  I.  Northern  Texas  Electric 

Bangor  &  Aroostook  Pepperell  Mfg. 

Bates  Mfg.  Ray  Consolidated 

Berlin  Mills  Reece  Buttonhole 

Boston  &  Corbin  Reece  Folding  Machine 
B.&M.  (also  Mass,  and  N.H.)  Revere  Sugar 

Continental  Mills  Submarine  Signal 

Draper  Company  Torrington 

Eastern  Steamship  Union  Mills 

Edwards  Mfg.  U.S.  Envelope 

Franklin  Company  U.  S.  Smelting 

Galveston  Houston  Elec.  U.  S.  Worsted 

Hill  Mfg.  Utah  Apex 

Inspiration  Winthrop  Mills 

Int.  Buttonhole  York  Mfg. 

Island  Creek  Coal.  Yukon  Gold 
La  Rose 


NOTE. — The  1911  Legislature  exempted  from  the  inheritance  tax  stock 
owned  by  non-residents  in  Maine  corporations  whose  business  is  done  out- 
side the  state.  The  missing  provision  holding  the  corporation  responsible 
if  it  transfers  stock  on  which  the  tax  has  not  been  paid  was  inserted .  It 
was  also  provided  that  shares  of  railroad  and  similar  corporations  owned 
by  non-residents  should  be  taxed  only  on  the  proportionate  part  of  their 
line  within  the  state  of  Maine.  Laws  of  1911,  chapter  163. 


56  INHERITANCE  TAXES 

11 
NEW  HAMPSHIRE. 

New  Hampshire's  first  inheritance  tax,  1%  on  collateral 
inheritances,  enacted  in  1878,  was  held  unconstitutional  in 
1882.' 

An  amendment  to  the  constitution  in  1903  paved  the  way 
for  the  present  collateral  inheritance  tax  enacted  in  1905.2 

The  tax  is  on  collateral  inheritances  only,  the  rate  is  uni- 
formly 5%,  and  no  amount  is  exempt.  No  tax  is  levied  on  an 
inheritance  to  father,  mother,  husband,  wife,  lineal  descendant, 
brother,  sister,  adopted  child,  lineal  descendant  of  adopted 
child,  wife  or  widow  of  son,  husband  of  daughter.8 

New  Hampshire  taxes  stock  in  a  New  Hampshire  corporation 
owned  by  a  non-resident4  and,  moreover,  taxes  registered  bonds 
of  a  New  Hampshire  corporation  owned  by  a  non-resident 
though  kept  outside  the  state.  Corporations  and  individuals 
transferring  or  delivering  securities  or  other  assets  of  non-residents 
are  made  responsible  for  the  tax.  Boston  &  Maine  stock  is 
taxed  only  on  the  proportion  of  its  line  within  New  Hampshire. 

It  is  the  practice  to  require  a  complete  inventory  of  a  non- 
resident's estate. 

New  Hampshire  is  the  only  New  England  state  that  has  no 
provision  whatever  for  preventing  or  reducing  double  taxation. 

This  tax  has  been  producing  about  $80,000  a  year. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  New  Hampshire  are  the  following: 

Amoskeag  Mfg.  Jackson  Company 

B.  &  M.  (also  Mass.  Me.)          Nashua  Mfg. 
Great  Falls  Mfg. 


'Curry  v.  Spencer,  61  N.  H.  624. 

'Tor  constitutionality  see  Thompson  vs.  Kidder,  74  N.  H.  89. 
'Laws  1905,  chap.  40,  as  amended  by  Laws   1907,  chaps.  68,  82,  138 
and  Laws  1909,  chap.  104. 

••Gardiner  v.  Carter,  74  X.  H.  507. 


INHERITANCE  TAXES. 


57 


Also  the  following  Boston  &  Maine  subsidiaries: 


Concord  &  Claremont 
Concord  &  Montreal 
Concord  &  Portsmouth 
Franklin  &  Tilton 
Manchester  &  Keene 
Manchester  &  Lawrence 
Nashua  &  Acton  (also  Mass.) 


Nashua  &  Lowell  (also  Mass.) 
Northern  Railroad 
Pemigewasset  Valley 
Peterborough  R.  R. 
Peterborough  &  Hillsborough 
Suncook  Valley 
Wilton  R.  R.  ' 


NOTE. — The  Legislature  of  11911  enacted  an  inheritance  tax  law  which 
confirms  and  strengthens  the  earlier  laws  (House  Bill  37) . 


58  INHERITANCE  TAXES. 

12. 
VERMONT. 

Vermont's  first  collateral  inheritance  tax  was  enacted  in 
1 896  >  and  substantially  amended  in  1904.  Its  main  features 
are  very  similar  to  the  New  Hampshire  statute. 

The  tax  is  on  collateral  inheritances  only,  the  rate  is  uni- 
formly 5%,  and  no  amount  is  exempt.  No  tax  is  levied  on  an 
inheritance  to  father,  mother,  husband,  wife,  lineal  descendant, 
step-child,  adopted  child,  child  of  step-child  or  of  adopted  child, 
wife  or  widow  of  son,  husband  of  daughter.2 

A  bill  for  a  graduated  direct  inheritance  tax  passed  the 
House  of  Representatives  during  the  1910-1911  session  but 
it  failed  to  pass  the  Senate. 

Vermont  taxes  stock  in  a  Vermont  corporation  or  national 
bank  owned  by  a  non-resident  and  like  New  Hampshire  taxes 
registered  bonds  as  well.  It  goes  even  a  step  further  and  makes  a 
claim  for  an  inheritance  tax  where  a  deceased  non-resident 
owns  stock  in  a  corporation  not  incorporated  under  the  laws  of 
Vermont  provided  such  foreign  corporation  has  its  principal 
office  in  Vermont.  Corporations  and  individuals  transferring 
or  delivering  securities,  and  banks  that  pay  deposits  of  non-resi- 
dents, are  made  responsible  for  the  tax. 

It  is  the  practice  of  the  tax  authorities  to  require  an  inven- 
tory of  the  entire  property  of  the  deceased,  and  a  copy  of  the  will 
before  permitting  a  Vermont  corporation  to  transfer  securities 
owned  by  a  deceased  non-resident. 

If  any  inheritance  tax  has  been  paid  by  either  a  resident 
or  non-resident  to  any  other  state  or  government,  except  the 


JFor  constitutionality  see  Hickok's  Estate,  78  Vt.  259. 
Public  Stats,  chap.  38,  §§821-901  as  amended  by  Acts   1908,  No.  31, 
approved  January  28,  1909. 


INHERITANCE  TAXES.  59 

United  States,  on  account  of  the  transfer  of  securities,  bank 
deposits  or  other  assets,  the  Vermont  tax  is  limited  to  an  amount 
sufficient  to  make  the  total  tax  5%. 

Vermont  does  not  tax  the  bank  deposits  of  a  Ver- 
mont resident  in  another  state  and  this  would  seem  to  apply 
to  securities  outside  the  state  as  well.1 

Among  the  more  prominent  companies  organized  under  the 
laws  of  Vermont  are: 

Fairbanks  &  Co. 
Central  Vermont 
Conn.  &  Pass.  Rivers 
Rutland  R.  R.  (also  N.  Y.) 
Vermont  Valley  R.  R. 


^oyslin's  Estate,  76  Vermont  88. 


60  INHERITANCE  TAXES. 

13. 
ILLINOIS. 

A  STATE  WHOSE  PRACTICE  Is  MUCH  CRITICISED  IN    SPITE  OF 
LIBERAL  EXEMPTIONS. 

Illinois  adopted  a  tax  on  all  kinds  of  inheritances  in  1895 
which  included  progressive  rates  applying  to  distant  relatives 
and  strangers  with  a  maximum  of  6%.J  The  constitutionality 
of  the  statute  was  sustained  in  the  Illinois  Supreme  Court.' 
Later  the  question  was  raised  in  the  Supreme  Court  of  the  United 
States,  which,  in  a  very  far-reaching  decision,  held  that  progres- 
sive taxation  and  substantial  exemptions  do  not  infringe  the 
equal  protection  of  the  laws  guaranteed  by  the  Fourteenth 
Amendment.8 

The  following  taxes  are  now  imposed:4 

Direct    inheritances    including    those    to    father, 
mother,  husband,  wife,  child,  brother,  sister, 
wife  or  widow  of  son,   husband  of  daughter, 
adopted   or  acknowledged   child,   lineal  descen- 
dant: 

Under  $20,000    exempt 

From      20,000  to  $100,000 1% 

Over      100,000    2% 

($20,000  is  always  exempt  and  only  the 

excess  over  this  amount  is  taxed.) 
Collateral  inheritances: 

Inheritances  to  uncle,  aunt,  niece,  nephew  and 
their  lineal  descendants. 

Under  $2,000      exempt 

From      2,000  to  $20,000 2% 

Over     20,000      4% 

($2,000  is  always  exempt  and  only  the 
excess  over  this  amount  is  taxed.) 

1Lawsof  1895,  p.  301. 

"Kochersperger  vs.  Drake,  167  111.  122. 

"Magoun  vs.  Illinois  Trust  &  Savings  Bank,  170  U.  S.  283.  See  also 
Billings  vs.  Illinois,  188  U.  S.  97. 

<Rev.  Stats.  1909,  Chapter  120,  Sections  366-388;  Senate  Bill  No. 
498  approved  June  14,  1909. 


INHERITANCE  TAXES.  61 

All  other  inheritances, 

Under      $500    exempt 

From          500    to  $10,000 3% 

From     10,000    to     20,000 4% 

From    20,000    to     50,000 5% 

From    50,000   to  100,000 6% 

Over    100,000    10% 

The  exemptions  apply  to  the  individual  shares,  not  to 
the  estate  as  a  whole.  The  exemption  of  $20,000  is  the  most 
liberal  given  to  direct  heirs  in  any  state. 

Illinois  taxes  stock  in  Illinois  corporations  owned  by  non- 
residents wherever  held.  If  the  corporation  transfers  the  stock 
without  notifying  the  tax  authorities,  it  is  made  liable  for  the 
tax  and  is  subject  to  a  penalty  as  well. 

A  bank  deposit  of  a  non-resident  in  Illinois,  and  both  stocks 
and  bonds  of  an  Illinois  corporation,  kept  by  a  non-resident  in  a 
safe  deposit  box  in  Illinois,  are  subject  to  the  inheritance  tax, 
but  stocks  and  bonds  of  foreign  corporations  owned  by  a  non- 
resident so  kept  in  a  safe  deposit  box  are  not  subject  to  the  tax.1 

Illinois  requires  the  executor  or  administrator  of  a  non- 
resident estate  to  answer,  under  oath,  a  printed  list  of  questions 
before  consent  is  given  to  the  transfer  of  any  Illinois  stocks; 
but  this  does  not  necessarily  involve  setting  forth  an  inventory 
of  the  entire  estate. 

Illinois  is  taxing  stock,  owned  by  non-residents,  of  foreign 
corporations  that  own  property  in  Illinois.  We  are  informed  by 
the  tax  authorities  "that  it  depends  upon  the  conditions  under 
which  the  property  is  held  here  as  to  whether  a  claim  would  be 
made."  We  have  yet  to  learn,  however,  of  any  condition  under 
which  such  stock  would  not  be  taxed. 

There  seems  to  be  more  complaint  made  against  the  treat- 
ment of  non-resident  estates  by  Illinois  than  in  the  case  of  any 
other  of  the  states,  not  even  excepting  New  York. 


'People  vs.  Griffith,  245  111.  532. 


62  INHERITANCE  TAXES. 

A  lawyer  expresses  this  sentiment  as  follows: 
''The  state  of  Illinois  is  particularly  unfair  toward  non- 
residents and  perhaps  indicates  it  in  no  stronger  way  than  by  its 
refusal  to  apportion  such  stocks  as  that  of  Illinois  Central, 
organized  under  the  laws  of  Illinois  and  extending  through  several 
other  states,  while  at  the  same  time  insisting  upon  an  apportion- 
ment of  such  stocks  as  Rock  Island,  which  are  incorporated  in 
other  states  but  have  some  of  their  line  in  Illinois.  In  other 
words,  this  particular  state  is  grabbing  everything  in  sight." 
On  this  subject  the  Inheritance  Tax  Attorney  for  Illinois  says: 
"The  rates  of  taxation  in  New  York,  New  Jersey  and  all 
other  eastern  states,  as  well  as  all  states  in  the  Union  which  have 
inheritance  tax  laws,  embody  rates  of  taxation  greatly  in  excess 
of  those  provided  in  the  inheritance  tax  laws  of  this  state.  The 
exemptions  provided  by  our  law  are  so  large  and  liberal  that  90% 
at  least  of  all  of  the  securities  transferred  (owned  at  death  by 
non-resident  decedent)  are  not  taxable  at  all." 

This  tax  has  been  producing  a  revenue  of  between  $500,000 
and  S750,000  annually. 

Among  the  more  prominent  companies  organized   under  the 
laws  of  Illinois  are: 

Chicago  &  Alton 

Chicago,  Burlington  &  Quincy 

Chicago  &  Eastern  Illinois 

Chicago  Great  Western 

Chicago  &  Northwestern  (also  Wis.  &  Mich.) 

Chicago  Railways 

Chicago,  Rock  Island  &  Pacific  Ry.*  (also  la.) 

Chicago  Telephone 

Diamond  Match 

Illinois  Brick 

Illinois  Central 

Peoples  Gas 

Pitts.,  C.,  C.  &  St.  L.  (also  W.  Va.,  Pa.,  Ind.) 

Pullman 

Wabash  (also  Ind.,  Mich.,  Mo.,  Ohio) 


'Chicago,  Rock  Island  &  Pacific  Railroad  is  an    Iowa  corporation. 
Rock  Island  Co.  is  a  New  Jersey  corporation. 


INHERITANCE  TAXES.  63 

14. 

CONNECTICUT. 

A    RETALIATIVE    CLAUSE    AGAINST    DOUBLE    TAXATION — SOME 
OFFICIAL  INFORMATION  FROM  OTHER  STATES. 

Connecticut  adopted  a  collateral  inheritance  tax  in  1889 
and  extended  it  to  direct  heirs  in  1897.  The  state  Supreme  Court 
decided  that  the  personal  property  of  a  non-resident  was  not 
taxable  under  this  statute,  but  that  the  law  as  amended  in  1903 
included  such  property.1  There  were  important  revisions  in 
1907  and  1909. 

The  following  taxes  are  imposed: 2 

Direct  inheritances,   including   those   to    parent,   husband, 

wife,  lineal  descendant  and  adopted  child, 

uniformly  1%. 
Exemptions: 

If  the  entire  estate  passes  to  such  heirs,  exemption  is 
$10,000.  This  applies  to  the  estate  as  a  whole,  not  to 
the  individual  shares.  If  the  estate  passes  in  part  to 
direct  heirs  and  in  part  to  others,  such  portion  of  $10,000 
as  the  share  of  the  direct  heirs  bears  to  the  whole  es- 
tate is  exempt.  This  exemption  applies  to  the  aggre- 
gate interest  of  the  direct  heirs,  not  to  the  individual 
shares. 

An  estate  of  a  non-resident  is  only  entitled  to  an  ex- 
emption of  such  portion  of  $10,000  as  the  Connecticut 
part  of  the  estate  is  to  the  entire  estate,  and  this  may 
be  reduced  as  above  if  other  than  direct  heirs  share 
the  estate. 

Collateral    inheritances,    including    all    other     inheritances, 

uniformly  5%. 
No  exemption. 

The  Connecticut  statute  is  unique  and  commendable  in 
that  it  specifically  sets  forth  the  property  of  non-residents 

iQallup's  Appeal,  76  Conn.  627.  For  constitutionality  see  Nettle- 
ton's  Appeal,  76  Conn.  235;  Hopkins'  Appeal,  77  Conn.  644. 

2Gen.  Stats.  §§305,  2367-2377:  Acts  1903,  chapter  63;  Acts  1905, 
chapter  256;  Acts  1907,  chapter  179;  Acts  1909,  chapter  218. 


64  INHERITANCE  TAXES. 

which  is  subject  to  the  tax.  In  most  states  the  statute  is  silent 
on  the  subject,  and  as  there  are  few  authoritative  decisions,  the 
tax  authorities  must  make  their  own  ruling.  This  portion  of 
the  statute  is  worth  quoting.  It  provides  that  the  following 
property  belonging  to  non-residents  shall  be  subject  to  the  tax: 

"All  real  estate  and  tangible  personal  property,  including 
moneys  on  deposit,  within  this  state;  all  intangible  personal 
property,  including  bonds,  securities,  shares  of  stock,  and  choses 
in  action  the  evidences  of  ownership  of  which  shall  be  actually 
within  this  state;  shares  of  the  capital  stock  or  registered  bonds 
of  all  corporations  organized  and  existing  under  the  laws  of  this 
state  the  certificates  of  which  stocks  or  such  bonds  shall  be  without 
this  state,  where  the  laws  of  the  state  or  country  in  which  such  de- 
cedent resided  shall,  at  the  time  of  his  decease,  impose  a  succes- 
sion, inheritance,  transfer,  or  similar  tax  upon  the  shares  of  the 
capital  stock  or  registered  bonds  of  all  corporations  organized 
or  existing  under  the  laws  of  such  state  or  country,  held  under 
such  conditions  at  their  decease  by  residents  of  this  state." 

This  last  retaliative  provision,  under  which  Connecticut 
taxes  stock  and  registered  bonds  of  Connecticut  corporations 
owned  by  residents  of  states  which  so  tax  stocks  and  registered 
bonds  of  their  own  corporations  when  owned  by  Connecticut 
residents,  is  an  interesting  attempt  to  reduce  double  taxation 
and  is  more  effective  in  doing  so  than  the  Massachusetts  recip- 
rocal provision. 

Because  the  wording  of  the  inheritance  tax  statute  in  many 
of  the  states  is  so  ambiguous,  the  Tax  Commissioner  of  Connecti- 
cut as  has  already  been  noted  considers  it  his  duty  to  obtain 
official  information  from  the  different  states  as  to  the  practice 
which  is  there  followed.1  Under  date  of  Dec.  15,  1910,  the  tax 
commissioner  enumerates  the  following  states  as  the  ones  whose 


'See  page  16  supra. 


INHERITANCE  TAXES.  65 

residents  must  pay  an  inheritance  tax  on  stock  of  a  Connecticut 
corporation  wherever  the  certificate  may  be: 

Colorado  New  Hampshire 

Illinois  New  Jersey 

Iowa  New  York 

Kansas  North  Carolina 

Maine  Oklahoma 

Massachusetts  Vermont 

Michigan  Wisconsin 

A  resident  of  the  following  states  must  pay  an  inheritance 
tax  on  the  registered  bonds  of  a  Connecticut  corporation  wherever 
the  bonds  may  be : 

Colorado  New  Hampshire 

Kansas  Oklahoma 

Michigan  Vermont 

Estates  of  residents  of  the  states  not  enumerated  are  not 
required  to  pay  a  tax  on  Connecticut  stock  or  registered  bonds 
as  the  case  may  be. 

Since  1908  eight  states  have  been  added  to,  and  two  states 
dropped  from  the  Connecticut  list  of  states  taxing  stock  of  non- 
residents, and  three  states  added  to  the  list  of  those  taxing 
registered  bonds. 

Hon.  William  H.  Corbin,  Tax  Commissioner  of  Connecticut, 
who  has  been  a  leader  in  the  movement  for  a  uniform  inheritance 
tax  in  urging  that  the  duty  of  determining  inheritance  taxes  be 
transferred  to  his  office,  says  in  his  report  to  the  1911  Legislature: 

"Under  the  present  statute,  each  probate  judge  of  Connec- 
ticut determines  the  amount  of  the  inheritance  tax  due  the  state 
on  all  estates  under  his  jurisdiction.  There  are  113  probate  judges 
in  as  many  probate  districts  in  the  state.  With  some  diversity 
in  the  interpretation  and  application  of  the  inheritance  tax  law 
by  these  judges,  a  quite  different  method  of  determining  this  tax 
is  followed  by  some  judges  from  that  which  obtains  with  others." 

From  this  faithful  picture  of  conditions  in  a  state  whose 
statute  is  the  most  specific  and  definite,  the  situation  can  be 


66  INHERITANCE  TAXES. 

imagined  in  most  of  the  states  whose  statutes  are  vague  and 
general . 

Any  person  or  corporation  that  transfers  or  delivers  any 
taxable  property  of  a  non-resident  without  the  permission  of  the 
tax  commissioner  is  subject  to  a  penalty  of  three  times  the 
amount  of  the  tax. 

It  is  not  the  practice  to  require  a  complete  inventory  of  the 
estate  of  a  non-resident,  but  the  total  amount  of  the  estate 
must  be  set  forth  and  an  inventory  of  the  property  actually 
and  constructively  in  Connecticut  is  required.  The  tax  has 
been  producing  about  $300,000  annually. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  Connecticut  are: 

American  Agricultural  Chemical 

American  Brass 

Connecticut  Ry.  &  Light 

N.  Y.,  N.  H.  &  H.,  (also  Mass,  and  R.  I.) 

Pope  Mfg. 

Scovill  Mfg. 

United  States  Finishing 


INHERITANCE  TAXES.  67 

15. 
NORTH  CAROLINA. 

North  Carolina  had  a  collateral  inheritance  tax  from  1847 
to  1874.  A  modest  tax  was  imposed  on  both  direct  and  col- 
lateral inheritances  in  1897.  In  1901  the  rates  were  substan- 
tially increased  and  made  progressive  with  a  maximum  of  15%.! 
This  enactment  was  much  more  radical  than  that  adopted  by  any 
of  the  states  up  to  that  time,  but  almost  duplicated  the  national 
inheritance  tax  of  1898,  which  was  then  in  force. 

The  following  taxes  are  imposed:2 

Direct  inheritances, 

Inheritances  to  wife  or  husband,  entirely  exempt. 

Inheritances  to  lineal  issue,  lineal  ancestor, 
brother,  sister,  or  person  standing  in  relation 

of  child f  of  1% 

Collateral  inheritances, 

Inheritances  to  descendant  of  brother  or 
sister  l£% 

Inheritances  to  brother  or  sister  of  father  or 
mother  or  descendants  of  same 3% 

Inheritances  to  brother  or  sister  of  grand- 
father or  grandmother  or  descendants  of 
same  4% 

All  other  inheritances, 

Under       $5,000    5% 

$5,000  to  10,000    7$% 

10,000  to  25,000    10% 

25,000  to  50,000 12£% 

Over          50,000    15% 

Exemption    in    every    case    $2,000. 

The  exemption  applies  to  each  individual  share  and  not  to 
the  estate  as  a  whole. 

North  Carolina  taxes  stock  in  a  North  Carolina  corporation 
owned  by  a  non-resident.  It  holds  the  corporation  responsible 


Tor  constitutionality  see  Pullen  vs.  Commissioners,  66  N.    C.  361; 
In  re  Morris  Estate,  138  N.  C.  259. 

2Public  Laws  1909,  Chapter  438,  §§6  to  21. 


68  INHERITANCE  TAXES. 

if  it  permits  the  transfer  of  such  stock  before  the  tax  is  paid. 
The  statute  applies  to  the  transfer  by  the  corporation  of  bonds 
as  well,  but  no  tax  is  being  collected  on  bonds  of  North  Carolina 
corporations  owned  by  non-residents.  This  tax  has  been  pro- 
ducing about  $10,000  annually. 

No  corporation  of  national  investment  importance  is  organ- 
ized under  North  Carolina  laws. 


INHERITANCE  TAXES.  69 

16. 
TENNESSEE. 

Tennessee  adopted  a  collateral  inheritance  tax  in    1891  and 
extended  the  tax  to  direct  inheritances  in  1909. 
The  following  taxes  are  imposed : l 

Inheritances  to  father,  mother,  husband 
wife,  child  (but  not  adopted  child)  lineal 
descendant, 

Under  $5,000    exempt 

From      5,000  to  20,000 1% 

Over      20,000    1|% 

All  other  inheritances, 

Under  $250 exempt 

Over        250 5% 

The  exemption  applies  to  the  entire  estate,  not  to  the  indi- 
vidual shares. 

Tennessee  is  not  attempting  to  collect  a  tax  on  stock  in  a 
Tennessee  corporation  owned  by  a  non-resident  when  the  shares 
are  physically  out  of  the  state,  although  there  is  a  clause  holding 
the  corporation  responsible  if  it  transfers  stock  for  a  foreign  exe- 
cutor or  administrator  before  the  tax  is  paid,  and  the  language  of 
the  statute  does  not  differ  materially  from  that  in  many  states 
which  tax  such  stock. 

The  collateral  inheritance  tax  was  producing  about  $50,000 
annually.  The  addition  of  direct  inheritances  should  materially 
increase  this. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  the  state  of  Tennessee  are: 

Nashville,  Chattanooga  &  St.  Louis 
Tennessee  Central 
Tennessee  Coal  &  Iron 


1893,  Chapter  174;   Acts  1903,  Chapter  561;   Acts   1909,  Chap- 
ter 479,  Section  20;  See  Zickler  vs.  Union  Bank,  104  Tenn.  277. 


70  INHERITANCE  TAXES. 

17. 
ARKANSAS. 

Arkansas  adopted  a  collateral  inheritance  tax  in  1901  and 
extended  the  tax  to  direct  inheritances  in  1907.  The  following 
taxes  are  now  imposed : l 

Inheritances  tj  grandparent,  father,  mother, 
husband,  wife,  lineal  descendant,  brother, 
sister,  adopted  child, 

If  entire  estate  is  under  So, 000 exempt 

On  the  excess  over  $5,000 1% 

Inheritances  to  uncle,  aunt,  niece,  nephew  and 
their  lineal  descendants, 

If  entire  estate  is  under  $2,000 exempt 

On  the  excess  over  $2,000 2% 

All  other  inheritances: 

If  entire  estate  is  under       $1,000 exempt 

If  entire  estate  is  $1 ,000  to  10,000 3% 

If  entire  estate  is  10,000  to  20,000 4% 

If  entire  estate  is  20,000  to  50,000 5% 

If  entire  estate  exceeds        50,000 6% 

The  Attorney  General  has  ruled  that  the  exemptions  apply 
to  the  estate  as  a  whole,  not  to  the  individual  shares. 

We  are  advised  by  the  Attorney  General's  office  that  shares 
of  stock  in  an  Arkansas  corporation  owned  by  a  non-resident 
decedent,  and  passing  to  a  non-resident  beneficiary,  are  subject 
to  the  inheritance  tax,  as  being  property  within  the  jurisdiction 
of  the  state  of  Arkansas,  on  the  ground  that  as  the  domicile  of 
the  corporation  is  in  Arkansas  and  its  capital  stock  is  taxable  in 
Arkansas,  any  of  that  stock  owned  by  a  decedent,  whether  a 
resident  or  a  non-resident,  would  be  liable  to  a  succession  tax. 

On  the  other  hand,  the  tax  commissioner  of  Connecticut  is 
officially  informed  that  Arkansas  does  not  tax  shares  of  stock  in 
Arkansas  corporations  owned  by  non-resident  decedents  when 

»Actof  May  31,  1909. 


INHERITANCE  TAXES.  71 

such  shares  of  stock  were  physically  out  of  the  state  on  the  date 
of  the  death  of  the  decedent,  and  for  that  reason  has  ruled  that 
the  retaliative  provision  of  the  Connecticut  law  does  not  apply 
to  residents  of  Arkansas.  The  usual  provision  holding  the  corpor- 
ations responsible  for  the  collection  of  the  tax  is  not  found  in  the 
Arkansas  statutes,  and  it  contains  no  specific  reference  to  the 
property  of  non-residents.  The  tax  has  been  producing  less  than 
$1000  per  year. 

Among  the  more  prominent  companies  organized    under  the 
laws  of  Arkansas  are: 

Arkansas  Midland 
Arkansas  Southwestern 
Louisiana  &  Arkansas 


72 


INHERITANCE  TAXES. 


18. 


TEXAS. 


Texas  adopted  a  collateral  inheritance  tax  in  1907.  Inheri- 
tances to  father,  mother,  husband,  wife  and  lineal  descendant 
are  exempt. 

The  following  taxes  are  imposed: l 

Inheritances  to  lineal  ancestor  (except  father  or 
mother)  brother  or  sister  and  lineal  descendant 
of  same, 

Under  $2,000    exempt 

Excess  over  2 ,000  u  p  to  $  1 0 ,000 ....  2% 
Excess  over  10,000 up  to  25,000....  2£% 
Excess  over  25 ,000  u  p  to  50 ,000 ....  3% 
Excess  over  50,000  up  to  100,000.. .  .  3£% 
Excess  over  100,000  up  to  500,000.  .  .  4% 
Excess  over  500,000  5% 

Inheritances  to  uncle  or  aunt  or  their  lineal  de- 
scendants, 

$1,000    exempt 


Under 
Excess  over 
Excess  over 
Excess  over 
Excess  over 
Excess  over 
Excess  over 


All  other  inheritances: 


1,000 up  to  $10,000... 

10,000  up  to   25,000... 

25 ,000  up  to    50,000... 

50,000  up  to  100,000... 
100 ,000  up  to  500 ,000... 
500,000  


Under 
Excess  over 
Excess  over 
Excess  over 
Excess  over 
Excess  over 
Excess  over 


$500    

500  up  to  $10,000.. 

10,000  up  to   25,000.. 

25, 000  up  to    50,000.. 

50, 000  up  to  100, 000.. 

100,000  up  to  500 ,000.. 


3% 
4% 
5% 
6% 

7% 
8% 

exempt 

4% 
5*% 

7% 
8*% 
10% 


500,000    12% 


The  exemption  applies  to  each   individual  share,  not  to  the 
estate  as  a  whole. 

Texas  is  not  now  claiming  a  tax  on  stock  of  a  Texas  corpor- 


Laws  of  Texas,  p.  496;  Acts  First  Called  Session,  30th  Legis- 
lature (1907),  chap.  21. 


INHERITANCE  TAXES.  73 

ation  owned  by  a  non-resident,  and  there  is  no  provision  for 
collecting  such  a  tax  through  the  corporation,  such  as  is  usually 
found.  The  language  of  the  statute,  however,  does  not  differ 
materially  from  that  of  many  of  the  states  that  claim  such  a  tax. 
Among  the  more  prominent  companies  organized  under  the 
laws  of  the  state  of  Texas  are: 

International  &  Great  Northern 
Texas  Central 
Texas  Co. 


74  INHERITANCE  TAXES. 

19. 
KANSAS. 

Kansas  adopted  a  tax  on  all  inheritances  in  1909.  The 
following  taxes  are  imposed : * 

Inheritances  to-  husband,  wife,  lineal  ancestor, 
lineal  descendant,  adopted  child,  lineal  descen- 
dant of  adopted  child,  wife  or  widow  of  son, 
husband  of  daughter: 

Under  $25,000    1% 

Excess  over    25,000  up  to  $50,000    2% 

Excess  over    50,000  up  to  100,000    3% 

Excess  over  100,000  up  to  500,000    4% 

Excess  over  500,000    5% 

Exemption  $5,000  (to  husband,  wife,  father, 
mother,  child,  adopted  child  only). 

Inheritances  to  brother,  sister,  nephew,  niece: 

Under  $25,000    3% 

Excess  over    25,000  up  to  $50,000    5% 

Excess  over    50,000  up  to  100,000    7$% 

Excess  over  100,000  up  to  500,000    10% 

Excess  over  500,000    12$% 

Exemption  $1,000. 

All  other  inheritances: 

Under  $25,000    5% 

Excess  over    25,000  up  to  $50,000    1\% 

Excess  over    50,000  up  to  100,000    10% 

Excess  over  100,000  up  to  500,000    12$% 

Excess  over  500,000    15% 

No  exemption. 

The  exemptions  apply  to  each  individual  share  not  to  the 
estate  as  a  whole.  If  the  Kansas  portion  of  the  inheritance  is 
less  than  the  exemption  Kansas  collects  no  tax. 

Kansas  is  taxing  stock  of  a  Kansas  corporation  owned  by 
a  non-resident,  and  registered  bonds  as  well.  The  corporation 
is  held  responsible  if  it  transfers  securities  before  the  tax  is  paid. 

Kansas  is  the  only  state  outside  New  England,  except  West 
Virginia,  whose  statute  contains  any  provision  for  avoiding 


'Laws    1909,  chapter  248.     Gen.  State.     (1909)    chapter    116,  Article 
7,  §§9265  to  9291. 


INHERITANCE  TAXES.  75 

double  taxation.  It  is  the  same  reciprocal  clause  that  is  found  in 
Massachusetts.  Personal  property  of  a  deceased  resident 
outside  the  state  which  is  taxed  by  another  state  or  country  is 
not  taxed  by  Kansas  unless  such  tax  is  less  than  the  Kansas  tax, 
and  then  Kansas  collects  only  the  difference.  Property  of  a 
non-resident  in  Kansas,  including  stock  wherever  situated  in  a 
Kansas  corporation,  will  not  be  taxed  (except  for  the  difference 
if  Kansas  rates  are  higher)  if  owned  by  a  resident  of  a  state  which 
extends  similar  courtesies  to  residents  of  Kansas.  Massachu- 
setts, Maine  and  Vermont  seem  to  be  the  only  states  that  do  so. 

It  is  the  practice  in  Kansas  to  require  a  complete  inventory 
of  the  estate  of  a  non-resident  which  has  any  property  subject 
to  Kansas  jurisdiction. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  Kansas  are: 

Atchison 

Kansas  City,  Ft.  Scott  &  Memphis 

Kansas  City,  Mexico  &  Orient 

Missouri,  Kansas  &  Texas 

St.  Joseph  &  G.  I.  (also  Neb.) 


76  INHERITANCE  TAXES. 

20. 
NEBRASKA. 

Nebraska  enacted  its  inheritance  tax  in  1901  ^  The  fol- 
lowing taxes  are  imposed:2 

Direct  inheritances,  including  those  to  father, 
mother,  husband,  wife,  child,  brother,  sister, 
wife  or  widow  of  son,  husband  of  daughter, 
adopted  or  acknowledged  child,  lineal  descen- 
dant, 

Under  $10,000    exempt 

Excess  over  $10,000    1% 

Collateral  inheritances, 

Inheritances   to   uncle,   aunt,   niece,   nephew 
and  lineal  descendant  of  same 

Under  $2,000    exempt 

Excess  over    2,000    2% 

All  other  inheritances, 

Under  $5,000    2% 

$5,000  to      10,000    3% 

10,000  to      20,000    4% 

20,000  to      50,000    5% 

Over  50,000    6% 

Exemption  $500. 

The  exemptions  apply  to  each  individual  share  rather  than 
to  the  estate  as  a  whole,  though  the  language  creating  the  $500 
exemption  is  ambiguous. 

It  is  a  fair  construction  of  the  statute  that  stock  in  a  Ne- 
braska corporation  owned  by  a  non-resident  is  subject  to  the 
tax,  especially  as  there  is  a  provision  holding  the  corporation 
responsible  if  it  transfers  stock  for  a  foreign  executor  before 
the  tax  is  paid,  if  it  has  knowledge  that  the  stock  is  subject  to 
tax.  The  tax  authorities  are  not  collecting  a  tax  on  such  stock 
at  present  if  the  certificate  is  kept  outside  the  state. 

The  proceeds  of  the  inheritance  tax  are  to  be  spent  for  the 


'For  constitutionality  see  State  vs.  Vinsonhaler,  74  Neb.  675. 
"Compiled  Stats.  (1905)  chapter  77,  Article  VIII.,  §§5176  to  5196. 


INHERITANCE  TAXES.  77 

improvement  of  county  roads,  but  if  there  are  no  other  funds 
available  for  the  purpose,  the  county  roads  can  hardly  have 
reached  the  European  standard  as  yet — the  receipts  have  aver- 
aged less  than  $3000  a  year. 

Except  St.  Joseph  &  Grand  Island  (also  incorporated  in 
Kansas)  there  is  no  corporation  of  national  investment  import- 
ance organized  under  Nebraska  laws. 


78  INHERITANCE  TAXES. 

21. 
WISCONSIN. 

Wisconsin's  first  inheritance  tax  law,  passed  in  1868' 
amounted  to  little  more  than  a  sliding  scale  of  probate  fees,  and 
after  various  amendments  was  declared  unconstitutional.1 
A  genuine  inheritance  tax,  enacted  in  1899,  was  declared  un- 
constitutional because  the  exemption  applied  to  the  estate  as  a 
whole,  not  to  the  individual  shares.2  Finally  in  1903  the  legis- 
lature passed  an  act  which  satisfied  the  constitutional  require" 
ments.8 

The  following  taxes  are  imposed:4 
Direct  inheritances, 
Inheritance  to  widow: 

First  $10,000    exempt 

Excess  over    10,000  up  to  $25,000    1% 

Excess  over    25,000  up  to    50,000    l£% 

Excess  over    50,000  up  to  100,000    2% 

Excess  over  100,000  up  to  500,000    2£% 

Excess  over  500,000    3% 

Inheritances  to  husband,  lineal  issue,  lineal 
ancestor,  adopted  or  mutually  acknowledged 
child  and  lineal  issue  of  such  child: 

First  $2,000 exempt 

Excess  over      2,000  up  to  $25,000    1% 

Excess  over    25,000  up  to    50,000    l£% 

Excess  over    50,000  up  to  100,000    2% 

Excess  over  100,000  up  to  500,000    2$% 

Excess  over  500,000    3% 


!State  vs.  Mann,  76  Wis.  469. 

'Black  vs.  State,  113  Wis.  205. 

"Nunnemacher  vs.  State,  129  Wis.  190. 

4Laws  1903,  Chapter  44,  249;  Laws  of  1905,  Chapter  96;  Laws  1907, 
Chapter  500;  Laws  1909,  Chapter  38,  504;  Wisconsin  Statutes,  Sections 
1087-1  to  1087-24  inc.,  162,  3818,  3813a,  and  3871a. 


INHERITANCE  TAXES.  79 


Collateral  inheritances, 

Inheritances  to  brother,  sister,  or  their  descend- 
ants, wife  or  widow  of  son,  husband  of  daughter: 
First  $500    ...............  exempt 

Excess  over         500  up  to  $25,000    ____     l£% 

Excess  over    25,000  up  to    50,000    ____     2J% 

Excess  over    50,000  up  to  100,000    ____        3% 

Excess  over  100,000  up  to  500,000    ____     3f  % 

Excess  over  500,000    ................ 


Inheritances   to   brother  or  sister  of  father  or 
mother  or  their  descendants: 
First  $250    ...............  exempt 

Excess  over         250  up  to  $25,000    ____       3% 

Excess  over    25,000  up  to    50,000    ____     4J% 

Excess  over    50,000  up  to  100,000    ____        6% 

Excess  over  100,000  up  to  500,000    ____      7j% 

Excess  over  500,000    ................       9% 

Inheritances  to  brother  or  sister  of  grandfather 
or  grandmother  or  their  descendants: 
First  $150    ................  exempt 

Excess  over          150  up  to  $25,000    ____        4% 

Excess  over    25,000  up  to    50,000    ____        6% 

Excess  over    50,000  up  to  100,000    ____       8% 

Excess  over  100,000  up  to  500,000    ____      10% 

Excess  over  500,000  .................      12% 

All  other  inheritances: 

First                   $100    ................  exempt 

Excess  over          100  up  to  $25,000    ____  5% 

Excess  over    25,000  up  to    50,000    ____  1\% 

Excess  over    50,000  up  to  100,000    ____  10% 

Excess  over  100,000  up  to  500,000    ____  12£% 

Excess  over  500,000    ................  15% 

The  exemption  applies  to  each  individual  share,  not  to  the 
estate  as  a  whole.  If  the  Wisconsin  portion  of  an  inheritance 
is  less  than  the  exempted  amount,  Wisconsin  imposes  no  tax. 

Wisconsin  taxes  stock  in  a  Wisconsin  corporation  owned 
by  a  non-resident  in  a  foreign  corporation  owning  property  in 
Wisconsin  also  taxable.  On  this  point  the  Attorney  General 
says:  'This  question  has  never  been  before  our  Supreme  Court, 


80  INHERITANCE  TAXES. 

and  this  department  has  not  had  occasion  as  yet  to  deal  with  a 
case  squarely  in  point." 

A  corporation  or  individual  that  transfers  or  delivers  any 
securities  or  assets  of  a  non-resident  without  first  notifying  the 
Attorney  General,  and  then  receiving  his  permission  to  do  so, 
is  responsible  for  the  tax.  It  is  not  the  practice  to  require  a 
complete  inventory  of  a  non-resident's  estate.  The  tax  is  pro- 
ducing not  far  from  $200,000  annually. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  Wisconsin  are: 

Chic.  &  N.  W.  (also  111.  &  Mich.) 
Chic.,  Mil.  &  St.  P. 
Chic.,  St.  P.,  Minn.  &  Omaha 
Northern  Pacific 


INHERITANCES  TAXES.  81 

22. 
CALIFORNIA. 

California  adopted  a  collateral  inheritance  tax  in  1893  follow- 
ing the  old  New  York  law.  In  1905  the  present  law  was  passed 
copying  the  Wisconsin  statute  except  that  the  exemptions  are 
more  liberal. 

The  following  taxes  are  imposed:1 

Direct  inheritances, 

Inheritances  to  widow  or  minor  child : 

First  $10,000    exempt 

Excess  over    10,000  up  to  $25,000    1% 

Excess  over    25,000  up  to    50,000    \\% 

Excess  over    50,000  up  to  100,000    2% 

Excess  over  100,000  up  to  500,000    2£% 

Excess  over  500,000    3% 

Inheritances  to  husband,  lineal  issue  (except 
minor  child),  lineal  ancestor,  adopted  or 
mutually  acknowledged  child, 

First  $4,000    exempt 

Excess  over      4,000  up  to  $25,000    1% 

Excess  over    25,000  up  to    50,000    l£% 

Excess  over    50,000  up  to  100,000    2% 

Excess  over  100,000  up  to  500,000    2j% 

Excess  over  500,000    3% 

Collateral  inheritances : 

Inheritances  to  brother,  sister,  or  their  descend- 
ants, wife  or  widow  of  son,  husband  of  daughter: 

First  $2,000    exempt 

Excess  over      2,000  up  to  $25,000    lj% 

Excess  over    25,000  up  to    50,000    2J% 

Excess  over    50,000  up  to  100,000    3% 

Excess  over  100,000  up  to  500,000    3|% 

Excess  over  5CO,000    4£% 

Inheritances  to  brother  or  sister  of  father  or 
mother  or  their  descendants: 

First  $1,500    exempt 

Excess  over      1,500  up  to  $25,000    3% 

Excess  over    25,000  up  to    50,000    4j% 

Excess  over    50,000  up  to  100,000    6% 

Excess  over  100,000  up  to  500,000      .  . .     7J% 
Excess  over  500,000 , 9% 


Statutes  1905,  Chapter  314. 


82  INHERITANCE  TAXES. 

Inheritances  to  brother  or  sister  of  grandfather 
or  grandmother  or  their  descendants: 

First  $1 ,000    exempt 

Excess  over      1,000  up  to  $25,000    4% 

Excess  over    25,000  up  to    50,000    6% 

Excess  over    50 ,000  up  to  100,000    8% 

Excess  over  100,000  up  to  500,000    10% 

Excess  over  500,000    12% 

All  other  inheritances: 

First  .    $600    exempt 

Excess  over         500  up  to  $25,000    5% 

Excess  over    25 ,000  up  to    50,000    7$% 

Excess  over    50,000  up  to  100,000    10% 

Excess  over  100,000  up  to  500,000    12£% 

Excess  over  500,000    15% 

The  exemptions  apply  to  each  individual  share,  not  to  the 
estate  as  a  whole. 

The  Supreme  Court  of  California  has  decided  that  the  tax 
is  on  the  excess  over  the  exemption,  not,  as  in  many  states,  on  the 
entire  inheritance  if  it  exceeds  the  exemption.1 

We  are  advised  by  the  Controller's  office  that  California 
taxes  stock  of  a  California  corporation  owned  by  a  non-resident. 
This  is  the  construction  of  the  statute  made  by  Superior  Courts, 
but  the  question  has  not  been  passed  upon  by  the  Supreme  Court. 

Corporations  and  individuals  delivering  or  transferring 
certificates  or  assets  of  a  non-resident  estate  are  responsible  for 
the  tax.  It  is  not  the  practice  to  icquire  a  complete  inventory 
of  a  non-resident's  estate. 

The  old  collateral  tax  seldom  produced  more  than  $300,000 
annually.  The  present  tax  receipts  are  running  close  to  $1,000,- 
000. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  the  state  of  California  are: 

Pacific  Tel.  &  Tel. 
Southern  Pacific  R.  R.a 


'Estate  of  Bull,  153  Cal.  715. 

^Southern  Pacific  Co.,  the  holding  company,  whose    shares  are  active 
in  New  York,  is  a  Kentucky  corporation. 


INHERITANCE  TAXES.  83 


23. 
IDAHO. 

Idaho,  in  1907,  copied  the  present  California  law  almost 
verbatim.1 

The  classification,  rates  of  tax  and  exemptions  are  exactly 
as  given  for  California.2 

Idaho  is  not  collecting  a  tax  on  stock  of  an  Idaho  corporation 
owned  by  a  non-resident  if  the  shares  are  physically  outside  of  the 
state,  although  the  statute  contains  the  common  provision  hold- 
ing the  corporation  responsible  for  the  tax  if  it  transfers  such 
stock  before  the  inheritance  tax  is  paid.  The  tax  has  as  yet 
been  of  no  consequence  as  a  revenue  producer. 

There  are  no  companies  of  general  investment  importance 
organized  under  the  laws  of  Idaho. 


Session  Laws  1907,  p.  558;   Idaho  Revised  Codes,  Title    10,  Chapter 
5,  §§1873 to  1897. 
2See  page  81. 


84  INHERITANCE  TAXES. 


24. 
MINNESOTA. 

Minnesota  has  had  much  difficulty  in  getting  an  inheritance 
tax  that  would  satisfy  the  courts.  Graduated  probate  fees 
similar  to  those  in  Wisconsin,  first  adopted  in  1875  and  extended 
in  1885,  were  held  unconstitutional.1  The  same  fate  successively 
befell  the  inheritance  tax  laws  of  1897, 1901  and  1902.2  The  pres- 
ent Act  adopted  in  1905  survived,  but  none  too  easily.8  A 
restrictive  constitutional  amendment  adopted  in  1894 4  which 
the  legislature  persisted  in  disregarding,  was  supplanted  in  19066 
by  another  amendment,  which  gives  the  legislature  broad  powers 
to  impose  inheritance  taxes. 

The  following  taxes  are  imposed:6 

On  all  inheritances, 

Under  $10,000 exempt 

From      10,000  to    50,000 l£% 

From     50,000  to  100,000 3% 

Over    100,000 5% 

The  exemption  applies  to  each  individual  share,  not  to  the 
estate  as  a  whole,  and  the  tax  in  every  case  is  only  on  the  excess  of 
the  inheritance  over  $10,000.  Minnesota  and  Utah  are  the  only 
states  that  make  no  distinction  between  direct  and  collateral  in- 
heritances. The  attorney  general  ruled  on  Dec.  14,  1909,  that 
stock  of  a  Minnesota  corporation  owned  by  a  non-resident  and 
kept  outside  the  state  is  taxable.  The  statute  provides  that  no 


v.  Gorman,  40  Minn.  232. 
2Drew  v.  Tifft,  79  Minn.  175;  State  v.  Bazille,87  Minn.  500;  State  v. 
Harvey,  90  Minn.  180. 

"State  v.  Bazille,  97  Minn.  11. 
'General  Laws  1895.  p.  3. 
'See  Laws  of  1905,  chapter  168. 
"General  Laws  1905,  chapter  288. 


INHERITANCE  TAXES.  85 

transfer  of  stock  shall  be  valid  unless  the  tax  is  paid,  and  that 
any  person,  bank  or  institution  that  transfers  or  delivers  securi- 
ties before  the  tax  is  paid  shall  be  responsible  for  it.  It  is  not  the 
practice  to  require  an  inventory  of  the  estate  of  a  non-resident. 
Among  the  more  prominent  corporations  organized  under  the 
laws  of  Minnesota  are: 

Great  Northern 

Minneapolis  &  St.  Louis 

Minn.  St.  Paul  &  S.  S.  M.  (also  N.  D.) 

Greene-Cananea 

North  Butte 

Shattuck-Arizona 


INHERITANCES  TAXES. 


25. 
MONTANA. 

Montana's  inheritance  tax  was  adopted  in  1897.1  The 
following  taxes  are  imposed:9 

Direct  inheritances,  including  those  to  father, 
mother,  husband,  wife,  child,  brother,  sister, 
wife  or  widow  of  son,  husband  of  daughter, 
adopted  or  mutually  acknowledged  child, 

lineal  descendant 1% 

Exemption,  estates  under  $7,500. 
(It  seems  to  have  been  intended  to  ex- 
empt  from    taxation   real   estate   passing   to 
direct  heirs.     The  language  of  the  statute  is 
very  much  confused,  and  as  it  reads,  real 
estate  passing  to  lawful  issue,  brother,  sister, 
wife  or  widow  of  son,  husband  of  daughter, 
adopted  child  and  lineal  descendant  of  adopted 
child  is  not  taxed;    but  real  estate  passing  to 
father,  mother,  husband  or  wife  is  taxed  5%.) 

Collateral  inheritances,  including  all  other  in- 
heritances    5% 

Exemption,  estates  under  $500. 

The  exemptions  apply  to  the  estate  as  a  whole,  not  to  the 
individual  shares. 

Montana  is  not  taxing  stock  of  Montana  corporations  owned 
by  non-residents,  though  the  statute  contains  a  provision  hold- 
ing the  corporation  responsible  for  the  tax  if  it  transfers  stock 
with  actual  or  constructive  knowledge  that  it  is  subject  to  the 
tax. 

It  is  therefore  rather  surprising  to  find  that  Montana  taxes 
stock  of  non-residents  in  foreign  corporations  which  own  property 
in  Montana.  It  is  not  the  practice  to  require  an  inventory  of 

*For  constitutionality  see  Gelsthorpe  vs.  Furnell,  20  Mont.  299. 
'Revised  Codes  1907,  Sections  7724  to  7751. 


INHERITANCE  TAXES.  87 

a  non-resident's  estate.      The  tax  has  been  producing  between 
$10,000  and  $20,000. 

The  most  important  company  organized  under  Montana 
laws  is  Anaconda.  The  other  important  companies  doing  busi- 
ness in  Montana  are  organized  under  the  laws  of  other  states. 


88  INHERITANCE  TAXES. 


26. 
NORTH  DAKOTA. 

North  Dakota  adopted  a  collateral  inheritance  tax  in  1903. 
Collateral  inheritances  only  are  taxed.  The  rate  is  uniformly 
2%  on  the  excess  over  $25,000. 

Inheritances  not  taxed  are  those  to  father,  mother,  husband, 
wife,  lineal  descendant,  adopted  child,  lineal  descendant  of 
adopted  child  -1 

Stock  in  a  North  Dakota  corporation  owned  by  a  non-resi- 
dent is  not  taxed.  This  tax  has  produced  little,  if  any,  revenue. 
It  is  of  so  little  importance  that  we  know  of  lawyers  who  have 
been  officially  advised  by  the  state  authorities  that  North 
Dakota  has  no  inheritance  tax. 


Revised  Codes  1905,  chapter  10,  Sections  8320  to  8339. 


INHERITANCE  TAXES.  89 

27. 
SOUTH  DAKOTA. 

South  Dakota's  inheritance  tax,  adopted  in  1905,  was 
held  unconstitutional  in  May,  1910. *  The  attorney  general's 
application  for  re-hearing  was  granted  and  the  matter  is  still 
pending. 

The  following  taxes  are  imposed : 2 

Direct  inheritances: 

Inheritance  to  widow 1% 

Exemption  $20,000. 

Inheritances  to  father,  mother,  husband,  child, 
brother,  sister,  wife  or  widow  of  son,  husband 
of  daughter,  adopted  or  acknowledged  child, 

lineal  descendant 1% 

Exemption  $5,000. 
Collateral  inheritances: 

Inheritances  to  uncle,  aunt,  nephew,  niece  and 

their  lineal  descendants 2% 

Exemption  $500. 
All  other  inheritances: 

Under  $10,000    4% 

From       10,000  to  $20,000 6% 

From      20,000  to  50,000 8% 

Over        50,000    10% 

Exemption  $100. 

The  exemptions  apply  to  individual  shares,  not  to  the  estate 
as  a  whole. 

A  tax  is  not  claimed  on  stock  of  South  Dakota  corporations 
owned  by  a  non-resident  and  kept  outside  the  state,  though 
there  is  the  usual  provision  holding  the  corporation  responsible 
for  the  tax.  It  is  not  the  practice  to  require  an  inventory  of  the 
estate  of  a  non-resident. 

There  are  no  corporations  of  general  investment  importance 
organized  under  the  laws  of  South  Dakota. 


iMcKennan's  Estate,  126  N.  W.  611. 

Session  Laws  1905,  chapter  54;    Compiled    Laws  (1910)  vol.  1,  pp. 
549-553. 


90  INKER  TANCE  TAXES. 

28. 
COLORADO. 

Colorado  enacted  an  inheritance  tax  in  1901, l  using  the 
Illinois  statute  of  1895  as  a  model.  It  was  radically  amended  in 
1909. 

The  following  taxes  are  imposed:2 

Direct  inheritances,  including  inheritances  to 
father,  mother,  husband,  wife,  child,  brother, 
sister,  wife  or  widow  of  son,  husband  of  daugh- 
ter, adopted,  or  acknowledged  child,  lineal 
descendant, 

Under  $10,000   exempt 

Excess  over  $10,000    2% 

Collateral  inheritances, 

Inheritances  to  uncle,  aunt,  nephew,  niece  and 

their  lineal  descendants 3% 

Exemption  $500." 
All  other  inheritances, 

Under  $10,000   3% 

From    10,000  to  $20,000 4% 

"       20,000  to   50,000 5% 

"       50,000  to  500,000 6% 

Over  500,000    ..." 10% 

Exemption  $500. 

The  exemptions  apply  to  individual  shares  and  not  to  the 
estate  as  a  whole.4 

Colorado  taxes  stock  in  a  Colorado  corporation  owned  by 
a  non-resident.  It  is  only  within  the  past  year  that  such  prop- 
erty has  been  taxed  to  any  appreciable  extent.  The  state  is  now 
deriving  considerable  revenue  from  this  source. 

Any  person  or  corporation  must  notify  the  attorney  general 
before  delivering  or  transferring  securities  of  a  non-resident, 
and  must  see  that  the  tax  is  paid.  A  non-resident's  estate  must 


1For  constitutionality  see  Estate  of  Magnes,  32  Col.  527. 
Colorado  R.  S.  of   1908,  Sections  5551  to  5571,  as  amended  by  Session 
Laws  1909,  chap.  193. 

*The  statute  is  not  clear  as  to  this  exemption. 
4People  v.  Koenig,  37  Colorado,  33. 


NHER^TANCE  TAXES.  91 

make  an  affidavit  as  to  its  property  before  consent  will  be  given 
to  the  transfer  of  securities. 

Among  the  more  prominent  companies  organized   under  the 
laws  of  Colorado  are: 

Colorado  Fuel  &  Iron 

Colorado  &  Southern 

Denver  &  Rio  Grande  (also  Utah) 

Wells-Fargo&Co. 


92  INHERITANCE  TAXES. 


29. 
UTAH. 

Utah  since  1901  has  taxed  all  inheritances  at  the  uniform 
rate  of  5%  on  the  excess  of  the  entire  estate  over  $10,000.1 

The  state  of  Utah  has  officially  notified  the  state  of  Con- 
necticut that  it  does  not  tax  stock  of  Utah  corporations  owned 
by  non-residents  if  the  stock  is  kept  outside  the  state;  but, 
nevertheless,  the  state  of  Utah  is  collecting  the  tax.  The 
E.  H.  Harriman  estate  paid  Utah  $798,546  in  March,  1911,  as 
an  inheritance  tax  on  its  Union  Pacific  stock. 

The  inheritance  tax  has  been  producing  about  $40,000  a 
year. 

Among  the  more  prominent  companies  organized  under 
the  laws  of  Utah  are: 

Central  Pacific 

Denver  &  Rio  Grande  (also  Col.) 
San  Pedro,  Los  Angeles  &  Salt  Lake 
Union  Pacific 


iCompiled  Laws  of   Utah  (1907),  Title  36,  Sections  1220  X  to  1220 
XJ31. 


INHERITANCE  TAXES.  93 


30. 
OREGON. 

Oregon  enacted  its  inheritance  tax  in  1903,  using  the  Illinois 
statute  of  1895  as  a  model.  It  has  since  been  substantially 
amended. 

The  following  taxes  are  imposed:1 

Direct  inheritances,  including  inheritances  to 
grandparent,  parent,  husband,  wife,  child, 
brother,  sister,  wife  or  widow  of  son,  husband 
of  daughter,  adopted  or  acknowledged  child, 

lineal  descendant 1% 

Exemption,  estates  less  than  $10,000  not  taxed. 
Tax  is  on  excess  over  $5000  to  each  person. 
Collateral  inheritances: 

Inheritances  to  uncle,  aunt,  nephew,  niece  and 

their  lineal  descendants 2% 

Exemption,  estates  less  than  $5000   are  not  taxed. 
Tax  is  on  excess  over  $2000  to  each  person. 
All  other  inheritances : 

Under  $10,000    3% 

From       10,000  to  $20,000 4% 

From      20,000  to    50,000 5% 

Over       50,000    6% 

Exemption — Tax  is  levied  only  when    the  inheritance 
exceeds  $500. 

Stock  in  an  Oregon  corporation  owned  by  a  non-resident 
is  not  taxed  unless  the  certificate  is  physically  within  the  state, 
but  stock  in  any  corporation  owned  by  a  non-resident  is  taxable 
if  the  certificate  is  kept  within  the  state.  A  corporation  is  re- 
sponsible if  it  transfers  any  taxable  securities  for  a  non-resident 
before  the  tax  is  paid.  Every  estate  is  required  to  file  a  com- 


iGeneral  Laws  Oregon  (1903)  pp.  49-65,  Laws  1905,  chap.  178;  Laws 
1909,  chap.  15. 


94  INHERITANCE  TAXES. 

plete  inventory.      The  receipts  from  this  tax  have  been  small, 
seldom  exceeding  $10,000. 

Among   the   more   prominent    companies  organized    under 
the  laws  of  Oregon  are: 

Oregon  &  California 

Oregon-Washington  Railroad  &  Navigation 

Oregon  Short  Line 


INHERITANCE  TAXES.  95 


31. 
WYOMING. 

Wyoming  adopted  an  inheritance  tax  in  1903,  which  was 
modified  in  1909. 

The  following  taxes  are  imposed:1 

Direct  inheritances,  including  inheritances  to 
father,  mother,  husband,  wife,  child,  brother, 
sister,  wife  or  widow  of  son,  husband  of  daugh- 
ter, adopted  or  acknowledged  child,  lineal 
descendant, 

If  entire  estate  is  under  $10,000 exempt 

On  excess  over  $10,000    2% 

Collateral  inheritances,  including  all  other  in- 
heritances    5% 

If  entire  estate  is  under  $500  it  is  not  taxed. 

Wyoming  is  not  now  collecting  a  tax  on  stock  of  a  Wyoming 
corporation  owned  by  a  non-resident  if  the  stock  certificate  is 
kept  outside  the  state,  though  it  apparently  was  doing  so  in  1908, 
and  the  statute  contains  the  usual  provision  holding  the  corpora- 
tion responsible  for  the  collection  of  the  tax. 

The  receipts  from  this  tax  have  been  insignificant. 

The  best  known  company  organized  under  the  laws  of 
Wyoming  is  Goldfield  Consolidated. 

Compiled  Statutes  (1910)  Chapter  165. 


96  INHERITANCE  TAXES. 


32. 
MICHIGAN. 

Michigan's  first  inheritance  tax  law  enacted  in  1893  was 
held  unconstitutional.1  The  present  statute  dates  from  1899,2 
with  important  amendments  in  1903,  1907  and  1909.  An  in- 
teresting feature  is  that  in  the  case  of  direct  inheritances,  personal 
property  only  is  taxed. 

The  following  taxes  are  imposed:8 

Direct  inheritances,  including  inheritances  to 
father,  mother,  husband,  wife,  child,  brother, 
sister,  wife  or  widow  of  son,  husband  of 
daughter,  adopted  or  mutually  acknowledged 

child,  lineal  descendant 1% 

Exemptions,  real  estate,  per- 
sonal property  up  to  $2,000. 
Collateral  inheritances,   including  all   other  in- 
heritances           5% 

Exemption  $100. 

The  exemptions  apply  to  individual  shares,  not  to  the  estate 
as  a  whole. 

Michigan  taxes  stock  of  a  Michigan  corporation  owned  by 
a  non-resident  wherever  held.  It  taxes  registered  bonds  of  a 
Michigan  corporation  as  well.  A  person  or  corporation  that 
transfers  or  delivers  securities  or  assets  of  a  non-resident  before 
the  tax  is  paid  is  responsible  for  the  tax. 

Michigan  taxes  stock  or  bonds  of  a  foreign  corporation 
owned  by  a  non-resident  if  the  certificates  are  kept  in  Michigan. 
It  is  the  practice  to  require  an  inventory  of  the  entire  estate 
before  permission  is  given  to  transfer  securities  of  a  Michigan 


Chambe  v.  Judge,  100  Michigan,  112. 

'•Tor  constitutionality  see  Union  Trust  Co.  v.  Judge,  125  Mich.  487. 
-Public  Acts  1899,  No.  188;   Public  Acts   1903.  No.  195;   Public  Acts 
1907,  No.  155,  No.  238;  Public  Acts  1909,  No.  44,  No.  298. 


INHERITANCE  TAXES.  97 

corporation.  This  tax  has  been  producing  from  $200,000  to 
$300,000  annually. 

The  application  of  the  inheritance  tax  law  of  Michigan 
to  securities  owned  by  non-residents  is  of  particular  importance 
because  of  the  large  number  of  Michigan  mining  companies 
whose  shares  are  listed  on  the  Boston  Stock  Exchange  and  are  ex- 
tensively owned  in  New  England. 

Among  the  more  prominent  companies  organized  under 
the  laws  of  Michigan  are: 

(Listed  New  York  Stock  Exchange) 

Chicago  &  Northwestern  (also  111.  &  Wis.) 

Detroit  United 

Duluth,  South  Shore  &  Atlantic  (also  Wis.) 

Michigan  Central 

PereMarquette  (also  Ind.) 

Wabash  (also  111.,  Ind.,  Mo.,  and  Ohio) 

(Boston  Copper  stocks) 

Adventure  Mayflower 

Ahmeek  Michigan 

Allouez  Mohawk 

Algomah  New  Arcadian 

Arnold  North  Lake 

Atlantic  Ojibway 

Calumet  &  Hecla  Old  Colony  Copper 

Centennial  Osceola 

Franklin  Quincy 

Hancock  Seneca 

Indiana  South  Lake 

Keweenaw  Superior 

Lake  Tamarack 

La  Salle  Victoria 

Laurium  Winona 

Mass  Wolverine 

Wyandot 


98  INHERITANCE  TAXES. 


33. 
WEST  VIRGINIA. 

West  Virginia  adopted  a  collateral  inheritance  tax  in  1887 
and  extended  it  to  direct  inheritances  in  1907.  The  following 
taxes  are  imposed:1 

Direct  inheritances: 

Inheritance  to  widow, 

Under  $15,000 exempt 

Excess  over    15,000  up  to  $25,000    ...  1% 

Excess  over    25,000  up  to    50,000    ...  l£% 

Excess  over    50,000  up  to  100,000    ...  2% 

Excess  over  100,000  up  to  500,000 2£% 

Excess  over  500,000 3% 

Inheritances  to  husband,  child,  lineal  descendant, 
lineal  ancestor, 

Under  $10,000 exempt 

Excess  over    10,000  up  to  $25,000    ...  1% 

Excess  over    25,000  up  to    50,000    ...  lj% 

Excess  over    50,000  up  to  100,000    ...  2% 

Excess  over  100,000  up  to  500,000    .  . .  2J% 

Excess  over  500,000 3% 

Collateral  inheritances, 

Inheritances  to  brother  or  sister  (not  including 
half  blood), 

Under           $25,000    3% 

Excess  over    25,000  up  to  $50,000    .  .  .  4£% 

Excess  over    50,000  up  to  100,000    ...  6% 

Excess  over  100,000  up  to  500,000    . . .  7£% 

Excess  over  500,000 9% 

All  other  inheritances, 

Under           $25,000    5% 

Excess  over    25,000  up  to  $50,000    .  . .  7£% 

Excess  over    50,000  up  to  100,000    .  .  .  10% 

Excess  over  100,000  up  to  500,000    .  . .  12^% 

Excess  over  500,000    15% 


West  Virginia  Code,  chapter  33;    Code    Supplement  (1909)  ch.  33; 
Acts  1907,  ch.  55;  Acts  1909,  ch.  63. 


INHERITANCE  TAXES.  99 

The  exemptions  apply  to  the  individual  shares,  not  to  the 
estate  as  a  whole. 

As  to  the  position  of  stocks  in  a  West  Virginia  corporation 
owned  by  a  non-resident,  the  tax  commissioner  says: 

"The  legislature  of  1909  attempted  to  pass  a  law  whereby 
such  inheritance  tax  could  be  collected  on  stock  in  West  Virginia 
corporations  owned  by  deceased  non-residents,  but  so  far  no 
taxes  have  been  collected  under  this  statute.  The  collection 
of  the  same  has  been  resisted  with  a  claim  that  the  statute  does 
not  fix  a  tax  on  such  stock." 

The  statute  contains  a  retaliative  provision  designed  to  re- 
duce double  taxation  of  non-resident  securities  similar  to  that  in 
Connecticut,  though  not  limited  to  registered  bonds.  It  provides 
that  the  state  shall  tax  stock  and  bonds  of  a  West  Virginia 
corporation  kept  outside  the  state  if  owned  by  residents  of  states 
which  so  tax  stocks  and  bonds  of  their  own  corporations  if  owned 
by  West  Virginia  residents. 

The  following  property  of  all  non-residents  is  specifically  made 
taxable:  all  real  estate  and  tangible  property  including  money 
on  deposit  within  the  state;  all  intangible  personal  property 
including  bonds,  securities,  shares  of  stock  and  choses  in  action, 
the  evidence  of  ownership  of  which  is  actually  within  the  state, 

Double  taxation  of  personal  property  belonging  to  a  resident 
of  the  state  but  kept  outside  the  state  is  avoided  by  a  provision 
similar  to  that  in  Massachusetts,  that  if  such  property  has  been 
taxed  in  other  states  West  Virginia  will  not  tax  it,  unless  the 
outside  tax  is  less  than  the  West  Virginia  tax,  and  then  West 
Virginia  collects  only  the  difference. 

A  corporation  is  responsible  for  the  tax  if  it  transfers  se- 
curities before  the  tax  is  paid  if  it  had  reasonable  cause  to  know 
that  the  property  was  subject  to  the  tax.  It  is  not  the  practice 
to  require  an  inventory  of  the  estate  of  a  non-resident. 


100  INHERITANCE  TAXES. 

Among  the  more  prominent  companies  organized   under  the 
laws  of  West  Virginia  are: 

Kanawha  &  Michigan  (Also  Ohio) 
U.  S.  Industrial  Alcohol 
United  Verde 


INHERITANCE  TAXES.  101 


34. 
KENTUCKY. 

Kentucky  adopted  a  collateral  inheritance  tax  in  1906.1 

Inheritances  to  father,  mother,  husband,  wife,  lawful  issue, 
wife  or  widow  of  son,  husband  of  daughter,  adopted  child,  lineal 
descendant  are  exempt. 

All  other  inheritances  are  taxed  uniformly  5%,  with  an 
exemption  of  $500  which  applies  to  each  individual  share. 

We  are  informed  that  the  attorney  general  has  ruled  that 
stock  of  a  Kentucky  corporation  owned  by  a  deceased  non- 
resident is  subject  to  the  tax.  Kentucky  is  not,  however,  in- 
cluded in  the  Connecticut  list  of  states  that  are  taxing  such  stock 
held  outside  the  state.  Kentucky  claims  a  tax  on  stock  owned  by 
a  non-resident  in  a  foreign  corporation  which  owns  property  in 
Kentucky  if  the  proportionate  value  of  the  Kentucky  property 
can  be  ascertained. 

The  statute  provides  that  when  a  foreign  executor  assigns 
or  transfers  any  stocks  or  loans  in  the  state  which  are  liable  to 
the  tax,  the  corporation  which  permits  such  transfer  shall  be 
liable  for  the  tax  if  it  is  not  paid.  Under  this  the  state  claims 
that  a  bank  is  responsible  for  the  tax  if  it  pays  over  a  deposit  of 
a  non-resident.  The  tax  authorities  in  this  state  seem  to  be 
particularly  energetic  in  their  claims.  In  one  case  the  tax  authori- 
ties sought  to  levy  a  tax  on  an  Ohio  estate  which  had  no  Kentucky 
property  of  any  sort,  simply  on  the  ground  that  the  executor 
was  a  resident  of  Kentucky;  but  the  Court  prevented  this.2 


iActs  of  1906,  chapter  22,  article  19. 
2Kentucky  v.  Peebles,  134  Kentucky,  121. 


102  INHERITANCE  TAXES. 

It  is  not  the  practice  to  require  an  inventory  of  the  estate  of 
a  non-resident. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  Kentucky  are: 

Cumberland  Tel.  &  Tel. 
Louisville  &  Nashville 
Southern  Pacific  Co. 


INHERITANCE  TAXES.  103 


35. 
NEW  JERSEY. 

TAXES  COLLATERAL  INHERITANCES — A  TRADE  WITH  INFORMERS. 

New  Jersey  has  had  a  collateral  inheritance  tax  since  1892. 
There  have  been  various  revisions,  the  last  one  in  1909.  Col- 
lateral inheritances  only  are  taxed,  at  the  uniform  rate  of  5%, 
with  an  exemption  of  $500  which  applies  to  individual  shares, 
not  to  the  estate  as  a  whole.  Inheritances  not  taxed  are  those 
to  father,  mother,  husband,  wife,  child,  lineal  descendant, 
brother,  sister,  wife  or  widow  of  son,  husband  of  daughter.1 

In  1908  the  Court  of  Appeals  of  New  Jersey  decided  that 
under  the  law  of  1894  stock  in  a  New  Jersey  corporation  belong- 

2 

ing  to  a  testator  domiciled  in  a  foreign  country  was  not  taxable. 

Under  the  present  law  New  Jersey  is  taxing  stock  in  a 
New  Jersey  corporation  owned  by  a  non-resident.8  A  cor- 
poration which  transfers  such  stock  without  permission  from  the 
comptroller  is  responsible  for  the  tax  and  subject  to  a  penalty  as 
well . 

If  the  entire  estate  of  a  non-resident  passes  to  exempt  heirs, 
the  executor  or  administrator  must  file  with  the  comptroller 
a  copy  of  the  will,  if  any,  and  an  affidavit  setting  forth  the  names 
and  relationship  of  the  beneficiaries,  whereupon  a  waiver  will  be 
issued  permitting  any  New  Jersey  stock  to  be  transferred. 

If  any  portion  of  a  non-resident's  estate  goes  to  other  than 
exempt  heirs,  it  is  necessary  to  file  in  addition  a  complete  inven- 
tory of  the  estate.  In  such  a  case  the  tax  on  the  portion  of  the 


aLaws  of  1909,  chapter  228;    Laws  of  1910,  chapter  28. 

2Neilson  v.  Russell,  76  N.  J.  L.  655;  19  L.  R.  A.  N.  S.,  887  and   Note. 

3See  Dixon  v.  Russell,  78  N.  J.  L.  296,  reversed  in  76  Atl.  982. 


104  INHERITANCE  TAXES. 

estate  in  New  Jersey  is  that  proportion  of  the  tax  which  the  es- 
tate would  have  had  to  pay  if  the  deceased  had  been  a  resident 
of  New  Jersey  which  the  New  Jersey  portion  of  the  estate  bears 
to  the  entire  estate. 

The  comptroller  is  authorized  to  make  an  arrangement  to 
pay  a  percentage  of  the  tax  that  may  be  collected  to  any  person 
giving  information  about  estates  of  residents  that  have  not 
taken  out  administration  within  one  year  after  the  date  of 
death,  and  estates  of  non-residents  that  have  any  property 
taxable  in  the  state  if  the  tax  is  not  paid  within  three  months 
after  the  death.  We  know  of  no  other  state  which  has  entered 
into  such  a  partnership  with  informers. 

The  inheritance  tax  has  usually  produced  something  over 
$200,000  a  year. 

An  acquaintance  with  the  inheritance  tax  laws  of  New  Jersey 
is  of  the  greatest  importance  to  investors  because  of  the  very 
large  number  of  corporations  organized  under  the  laws  of  that 
state.  Among  the  more  prominent  are: 

Allis-Chalmers  Int.  Silver 

Amalgamated  Int.  Smelting 

Am.  Beet  Sugar  Int.  Steam  Pump 

Am.  Brake  &  Foundry  Isle  Royale 

Am.  Can  Kansas  City  Ry.  &  Lt. 

Am.  Car  &  Foundry  Lake  Superior  Corp. 

Am.  Cement  Library  Bureau 

Am .  Cotton  Oil  Minn .  Gen .  Electric 

Am.  Hide  &  Leather  Natl.  Biscuit 

Am.  Ice  Natl.  Carbon 

Am .  Linseed  Oil  Natl .  Enam .  &  St . 

Am.  Malt  Natl.  Lead 

Am.  Radiator  N.Y.  Air  Brake 

Am.  Sewer  Pipe  N.  Y.  Susq.  &  West.  (Also  Pa.) 

Am.  Shipbuilding  Niles-Bement-Pond 

Am.  Smelting  North  American  Co. 

Am.  Snuff  Otis  Elevator 

Am.  Soda  Fountain  Pacific  Coast 

Am.  Steel  Foundries  Pittsburg  Coal 

Am.  Sugar  Pressed  Steel  Car 


INHERITANCE  TAXES. 


105 


Am.  Tobacco 

Am.  Type  Founders 

Am.  Woolen 

Am.  Writing  Paper 

Butte  Coalition 

Central  Leather 

Cent.R.R.ofN.  J. 

Chic.  Junct.  R.  R.  &  Un.  St.  Y. 

Chic.  Pneumatic  Tool 

Chic.  Subway 

Copper  Range 

Corn  Products 

Crucible  Steel 

Distillers  Sec. 

Dupont  Powder 

Electric  Storage  Battery 

Gen.  Asphalt 

HavanaElec. 

Hey  wood  Bros.  &  Wakefield 

Ingersoll  Rand 

Int.  Harvester 

Int.  Mer.  Marine 


Quaker  Oats 

Ry.  Steel  Spring 

Repub.I.&   S. 

Rock  Island  Co. 

St.  Mary's  Min.  Land 

Sloss-Sheffield 

Standard  Oil 

Tennessee  Copper 

Twin  City  R.  T. 

Union  Bag  &  Paper 

United  Fruit 

United  Shoe  Machinery 

U.S.  C.I.  Pipe 

U.S.Red.&Rfg. 

U.S.  Realty 

U.S.  Rubber 

U.S.  Steel 

Utah 

Utah  Cons. 

Va.-Car.  Chemical 

Vulcan  Detinning 

Western  Tel. 


106  INHERITANCE  TAXES. 

36 
LOUISIANA. 

EXEMPTS  PRO*  ERTY' THAT  HAS   BORNE  ITS  SHARE  OF    TAX- 
ATION— FORMERLY    DISCRIMINATED    AGAINST    ALIENS. 

Three  states,  Louisiana,  Iowa  and  Washington,  have  at 
some  time  discriminated  severely  against  non-resident  aliens. 
The  law  has  been  repealed  in  Louisiana,  practically  nullified  by 
a  decision  of  the  State  Supreme  Court  in  Washington,  but  still 
stands  in  Iowa. 

Louisiana  was  the  second  state  to  tax  inheritances.  This 
was  in  the  form  of  a  tax  of  10%  imposed  on  estates  passing 
to  non-resident  aliens,  which  was  enacted  in  1828. l  This  re- 
mained in  force  until  1877.  It  was  revived  in  1894  and  ex- 
tinguished by  the  new  Constitution  of  1898. 

Its  constitutionality  was  sustained  in  the  Supreme  Court 
of  the  United  States  which  held  that  as  a  state  has  the  power  to 
forbid  an  alien  to  take  any  property  whatever  situated  within 
its  limits,  it  may  impose  any  tax  it  chooses  as  a  condition  to 
allowing  an  alien  to  succeed  to  property.2  The  Supreme  Court 
of  the  United  States  also  held  that  the  statute  did  not  conflict 
with  a  treaty  withWurtemberg  which  had  evidently  been  intended 
to  secure  equal  treatment  for  aliens  and  residents.8  Yet  the 
Louisiana  Supreme  Court  decided  that  the  statute  conflicted  with 
a  similar  treaty  with  France  and  so  could  not  apply  to  French 
citizens  4 

The  Constitution  of    1898  authorizes  a  direct  inheritance 


'Acts  1828,  No.  95,  §§  1,  2. 
2Mager  v.  Grima,  8  How.  490. 
8Freaerickson  v.  Louisiana.  23  How.  445. 
Succession  of  Dufour,  10  La.  An.  391. 


INHERITANCE  TAXES.  107 

tax  of  not  over  3%  with  a  minimum  exemption  of  $10,000,  and 
a  collateral  inheritance  tax  of  not  over  10%. J 

The  next  article  of  the  Constitution  is  as  follows: 

"The  tax  provided  for  in  the  preceding  article  shall  not  be 
enforced  when  the  property  donated  or  inherited  shall  have  borne 
its  just  proportion  of  taxes  prior  to  the  time  of  such  donation  or 
inheritance."2  It  is  a  stock  argument  in  defence  of  an  in- 
heritance tax  that  it  reaches  much  property  that  has  escaped 
taxation  during  the  owner's  lifetime,  without  considering  that 
it  equally  reaches  property  that  has  not  escaped.  Louisiana  by 
exempting  property  that  has  borne  its  proper  burden  is  the 
only  state  in  the  country  that  is  honest  in  this  respect.8 

The  present  law  was  adopted  in  1904  and  modified  in  1906. 
The  following  taxes  are  imposed: 4 

Direct  inheritances,  including  those  to  direct  descendants 
and  direct  ascendants,  2%. 

Exemption  $10,000. 

Collateral  inheritances,  including  collateral  relations  and 
strangers,  5%. 

No  exemption. 

The  exemption  applies  to  the  individual  shares,  not  to  the 
estate  as  a  whole. 

We  are  informed  that  Louisiana  is  taxing  stock  of  a  Louisiana 
corporation  owned  by  a  non-resident.  The  statute  provides 
that  no  bank  having  money  or  securities  shall  turn  them  over, 
and  no  corporation,  the  stock  or  registered  bonds  of  which  are 
owned  by  the  deceased,  shall  deliver  or  transfer  the  same  to  any 
heir  until  the  tax  is  paid.  Louisiana  is  not  included,  however, 
in  the  Connecticut  list  of  states  that  are  taxing  stock  or  bonds 


2Louisiana  Constitution,  Article  236. 
1Louisiana  Constitution,  Article  235. 
3But  see  succession  of  Kohn,  115  La.  71. 
4Acts  1904,  No.  45;  Acts  1906,  No.  109. 


108  INHERITANCE  TAXES. 

owned  by  non-residents.     This  tax  has  been  producing  from 
$100,000  to  $200,000  a  year. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  Louisiana  are: 

Louisiana  &  Northwest 

Louisiana  Ry.  &  Navigation 

Louisiana  Western 

Morgan's  La.  &  Tex.  R.  R.  &  S.  S.  Co. 

New  Orleans  Great  Northern 

Opelousas,  Gulf  &  Northeastern 


INHERITANCE  TAXES.  109 


37. 

IOWA. 
MORE   DISCRIMINATION  AGAINST    THE  NON-RESIDENT  ALIEN. 

Iowa  adopted  a  collateral  inheritance  tax  in  1896.  In- 
heritances to  father,  mother,  husband,  wife,  lineal  descendant, 
adopted  child,  step  child,  lineal  descendant  of  adopted  child 
or  step  child  are  exempt. 

The  following  taxes  are  imposed : 1 

Collateral  inheritances, 

Inheritances    to    other   relatives    and    strangers 

except  non-resident  aliens 5% 

Exemption  $1,000. 

Inheritances  to  brothers  or  sisters  who  are  non- 
resident aliens 10% 

Inheritances  to  more  distant  relatives  or  strangers 
who  are  non-resident  aliens 20% 

The  exemption  applies  to  the  estate  as  a  whole  rather  than 
to  the  individual  shares.2  The  validity  of  this  discriminatory 
tax  against  non-resident  aliens  has  not  been  passed  upon  by 
the  courts,  but  it  would  be  very  surprising  if  it  should  not  be 
held  that  it  is  in  violation  of  most  of  the  present  treaties  with 
the  important  foreign  countries. 

Iowa  taxes  stock  of  an  Iowa  corporation  owned  by  a  non- 
resident,8 and  the  corporation  is  held  responsible  for  the  tax. 
Iowa  also  claims  a  tax  on  the  stock  of  a  non-resident  in  a  foreign 
corporation  which  owns  property  in  Iowa.  Safe  deposit  com- 
panies and  kindred  institutions  are  made  liable  for  the  tax  unless 
they  notify  the  state  treasurer  before  delivering  over  securities 


of   1897,  also  Code  Supplement  1907,  Title  7,  chapter  4;  Acts 
33  G.  A.  1909,  chapter  92. 

2Herriott  v.  Bacon,  110  Iowa,  342. 
"Estate  of  Culver,  123  N.  W.  743. 


110  INHERITANCE  TAXES. 

to  the  representative  of  an  estate.     This  tax  has  been  producing 
between  $150,000  and  $200,000  annually. 

Among  the  more  prominent  companies  organized  under  the 
laws  of  Iowa  are: 

Chic.,  Rock  Island  &  Pac.  R.  R. 
Des  Moines  &  Ft.  Dodge 


INHERITANCE  TAXES.  Ill 

38. 
WASHINGTON. 

Washington  adopted  an  inheritance  tax  in  1901 1  with  im- 
portant amendments  in  1905  and  1907. 
The  following  taxes  are  imposed : 2 

Direct  inheritances,  including  inheritances  to 
father,  mother,  husband,  wife,  lineal  descen- 
dant, adopted  child,  lineal  descendant  of 
adopted  child, 

Under  $10,000    exempt 

Excess  over    10,000    1% 

Collateral  inheritances, 

Inheritances  to  collateral  heirs  to  and  including 
the  third  degree  of  relationship, 

Under  $50,000    3% 

Excess  over    50,000  up  to  $100,000    ..       4j% 

Excess  over  100,000    6% 

Inheritances  to  collateral  heirs  beyond  the  third 
degree,  or  strangers, 

Under  $50,000    6% 

Excess  over    50,000  up  to  $100,000    ..          9% 

Excess  over  100,000    12% 

Inheritances  to  collateral  relatives  or  strangers 
who  are  aliens,  not  residing  in  the  United 
States 25% 

The  exemption  under  direct  inheritances  applies  to  the 
estate  as  a  whole,  not  to  individual  shares,  and  if  the  Washington 
portion  of  the  estate  of  a  non-resident  is  less  than  this  amount, 
the  estate  is  not  taxed. 

The  Supreme  Court  of  the  stare  of  Washington  has  decided 
that  the  25%  tax  on  inheritances  to  non-resident  aliens  vio- 
lates the  treaty  with  Norway  and  Sweden.3  There  are  similar 
treaties  with  nearly  all  other  important  countries.  The  tax  com- 


1For  constitutionality  see  State  v.  Clark,  30  Wash.  439. 
2RevenueLawsofWashington,1907,§§204to  221;  Rem.  &  Ball.     Code 
(1910),  Title  76,  chap.  7. 

8Estate  of  Peder  G.  Stixrud,  58  Wash.  339. 


112  INHERITANCE  TAXES. 

mission  is  no  longer  attempting  to  collect  such  a  tax,  though  the 
law  has  not  actually  been  repealed. 

Washington  taxes  stock  of  a  Washington  corporation  owned 
by  a  non-resident.  A  corporation  that  transfers  stock  or  a  safe 
deposit  company  that  delivers  over  securities  without  notifying 
the  state  treasurer  is  responsible  for  the  tax. 

Washington  has  not  hitherto  made  any  claim  for  inheritance 
taxes  where  a  deceased  non-resident  owns  stock  in  a  foreign 
corporation  owning  property  within  the  state  of  Washington, 
but  the  tax  commission  proposes  to  undertake  the  collection  of 
such  a  tax  in  the  near  future.  It  is  not  the  practice  to  require 
an  inventory  of  the  entire  estate  before  permitting  the  corpora- 
tion to  transfer  stock  owned  by  a  deceased  non-resident. 

Among  the  more  important  companies  organized  under  the 
laws  of  the  state  of  Washington  are: 

Chic.,  Milwaukee  &  Puget  Sound 
Pacific  Coast  Power 
Seattle  Electric 


NOTE. — The  25%  non-resident  alien  clause  was  repealed  at  the  1911 

session. 


CHAPTER  VIII. 
A     MOVEMENT    FOB    A    UNIFORM     INHERITANCE    TAX    LAW. 

The  demand  for  a  uniform  inheritance  tax  law  found  ex- 
pression in  the  report  of  a  committee  on  the  subject  made  to  the 
Fourth  International  Tax  Conference  held  at  Milwaukee,  Wis- 
consin, in  the  summer  of  1910.  Thirty-five  states,  two  Canadian 
provinces  and  sixteen  universities  were  represented  by  officially 
appointed  delegates. 

At  the  first  Conference  in  1907  the  following  resolution  had 
been  adopted. 

WHEREAS,  the  principles  of  international  and  interstate 
comity  require  that  the  same  property  should  not  be  taxed 
by  two  jurisdictions  at  the  same  time,  and  the  laws  for  taxation 
of  the  transfer  of  property  at  death  commonly  transgresses  these 
principles,  be  it 

RESOLVED,  that  succession  and  inheritance  tax  laws  should 
be  so  amended  that  the  same  property  shall  not  be  taxed  by 
two  jurisdictions  at  the  death  of  the  owner. 

At  the  second  conference  in  1908  a  committee  was  appointed 
to  prepare  a  model  bill  which  would  accomplish  this  result.  This 
committee  included: 

Hon.  William  H.  Corbin,  State  Tax  Commissioner  of  Con- 
necticut. 

Prof.  Charles  J.  Bullock,  Harvard  University. 

Hon.  Lawson  Purdy,  President  of  the  Dept.  of  Taxes,  New 
York  City. 

Mr.  A.  C.  Pleydell,  Secretary,  New  York  Tax  Reform 
Association. 


114  INHERITANCE  TAXES. 

Mr.  E.  L.  Heydecker,  Asst.  Tax  Commissioner,  New  York 
City. 

Prof.  Joseph  H.  Underwood,  University  of  Montana. 

Prof.  S.  S.  Huebner,  University  of  Pennsylvania. 

The  committee  aimed  to  produce  a  bill  imposing  a  reasonable 
tax  which  would  provide  a  fair  revenue  and  also  a  tax  definitely 
fixed  and  easily  computed.  The  tax  proposed  is  graded  as  to 
relationship  and  progressive  as  to  the  amount  of  the  inheritance, 
and  is  based  on  the  value  of  each  inheritance,  not  on  the  total 
value  of  the  estate.  It  avoids  double  taxation  of  securities  by 
proposing  that  they  should  be  taxed  only  at  the  residence  of  the 
owner. 

"Tangible  property"  is  defined  to  mean  corporeal  property 
such  as  real  estate  and  goods,  wares  and  merchandise.  "In- 
tangible property"  is  defined  to  mean  incorporeal  property, 
including  money,  deposits  in  bank,  shares  of  stock,  bonds, 
notes,  credits,  evidences  of  an  interest  in  property  and  evidences 
of  debt. 

The  proposed  law  then  provides  that  a  resident  shall  pay 
an  inheritance  tax  on  all  his  intangible  property  and  on  his  tan- 
gible property  situated  within  the  state,  and  that  a  non-resident 
shall  pay  an  inheritance  tax  only  on  tangible  property  within  the 
state. 

The  classification  and  rates  proposed  are  as  follows: 

Direct  inheritances,  including  those  to  father, 
mother,  husband,  wife,  child,  brother,  sister, 
wife  or  widow  of  son,  husband  of  daughter, 
adopted  or  mutually  acknowledged  child,  lineal 
descendant, 
Under  $2,500  (to  each  heir)  . .  .  exempt 

Excess  over         2,500  up  to     $25,000 1% 

Excess  over       25,000  up  to     250,000 2% 

Excess  over     250,000  up  to  1 ,000,000 3% 

Excess  over  1,000,000 4% 


INHERITANCE  TAXES.  115 

Collateral  inheritances,   including   all  other  in- 
heritances, 
Under  $500  (to  each  heir)  . .  .  exempt 

Excess  over  500  up  to     $10,000 2% 

Excess  over       10,000  up  to       25,000 3% 

Excess  over       25,000  up  to     100,000 5% 

Excess  over     100 ,000  u  p  to  1 ,000 ,000 10% 

Excess  over  1,000,000 15% 

The  conference  recommended  to  every  one  of  the  states  the 
adoption  of  such  a  bill.  Whatever  difference  of  opinion  there 
may  be  as  to  the  rates  suggested,  there  certainly  can  be  no  sound 
excuse  for  not  adopting  the  provisions  that  eliminate  double 
taxation. 

To  obtain  uniform  legislation,  concerted  action  throughout 
the  country  is  necessary  as  it  was,  for  example,  in  the  adoption 
of  the  uniform  "Negotiable  Instruments  Act."  The  power  to 
impose  an  inheritance  tax  is  shared  by  the  states  and  the  federal 
government  independently  so  that  federal  legislation  cannot 
accomplish  uniformity. 

Incidentally,  the  Tax  Conference  has  taken  a  very  decided 
position  that  the  federal  government  should  not  exercise  its 
power  to  levy  an  inheritance  tax  but  should  leave  this  tax  to  the 
states. 

It  will  be  interesting  to  see  if  the  well-reasoned  plan  of  this 
Conference,  which  included  delegates  appointed  by  the  governors 
of  35  states,  will  have  any  effect  in  stopping  the  riot  of  double  and 
triple  taxation. 


CHAPTER  IX. 

SOME  MATTERS  NOT  TOUCHED  UPON — THE  POSITION  Or  TBUST 
CERTIFICATES — SOME  EFFORTS  To  AVOID  DOUBLE  TAXA- 
TION. 

The  purpose  of  these  articles  has  been  only  to  indicate  to 
investors  in  a  general  way  how  their  securities  may  be  affected 
by  inheritance  tax  laws,  especially  of  states  other  than  the  ones 
in  which  they  reside.  For  that  reason  many  matters  of  con- 
siderable importance  have  not  even  been  touched  upon. 

The  position  of  bequests  for  religious,  charitable  or  educa- 
tional purposes  has  not  been  gone  into.  Such  bequests  are 
usually  exempt  from  inheritance  tax,  though  frequently  the 
bequest  is  exempt  only  if  the  money  is  to  be  spent  in  the  state. 

No  attempt  has  been  made  to  deal  with  the  complicated 
details  involved  in  computing  the  inheritance  tax  where  property 
is  left  in  trust,  or  otherwise,  to  one  person  for  life  and  then  passes 
to  some  one  else. 

Nor  has  there  been  any  attempt  to  go  into  questions  of  ad- 
ministrative details  such  as  who  determines  the  tax,  who  col- 
lects the  tax  and  when  it  is  due.  There  is  usually  some  ad- 
vantage in  prompt  payment  and  a  penalty  in  the  way  of  exces- 
sive interest  if  payment  is  delayed  beyond  a  certain  time. 

From  numerous  inquiries  that  we  have  received  it  seems 
that  there  is  some  confusion  as  to  the  basis  of  the  computation 
of  the  inheritance  tax  on  securities.  Many  people  have  an  idea 
that  the  tax  is  based  on  their  par  value.  Such  is  not  the  case. 
The  tax  on  all  property  is  based  upon  its  real  or  market  value 
at  the  time  of  death.1 


'Hooper  v.  Bradford,  178  Mass.  95. 


INHERITANCE  TAXES.  117 

There  is  much  uncertainty  as  to  the  status  of  trust  certifi- 
cates like  Great  Northern  Ore  certificates.  It  has  been  noted 
that  Massachusetts  treats  very  similar  organizations,  such  as 
Massachusetts  Electric  and  Massachusetts  Gas,  as  standing 
on  the  same  footing  with  Massachusetts  corporations,  although 
they  are  not  incorporated  and  their  shares  represent  only  a  bene- 
ficial interest  in  property  held  by  trustees.  As  to  the  status  of 
Great  Northern  Ore  certificates  (it  will  be  remembered  that  Great 
Northern  Railway  is  a  Minnesota  corporation,  the  Chairman  of 
the  Minnesota  Tax  Commission  says : 

Our  courts  have  not  yet  passed  upon  the  question  whether 
the  Great  Northern  Ore  certificates  are  subject  to  the  provisions 
of  the  inheritance  tax  law.  Inasmuch  as  these  certificates  are 
merely  evidences  of  indebtedness,  payable  upon  certain  contin- 
gencies, our  attorney  general  has  been  unable  to  determine 
their  situs  for  taxation  and  has  not  placed  them  in  the  category 
of  'stocks.'  Whether  any  attempt  will  be  made  to  do  so  in  the 
future  is  very  problematical." 

As  has  been  noted,  very  few  of  the  many  questions  that  arise 
have  been  settled  by  the  courts.  Where  a  question  has  not  been 
passed  upon  by  the  courts,  it  may  be  safely  assumed  that  the 
tax  authorities  will  construe  it  in  such  a  way  as  to  get  a  tax  for 
the  state  and  the  biggest  one  possible.  To  this  situation  is  due 
much  of  the  irritation  occasioned  by  the  operation  of  inheritance 
tax  laws.  Though  a  state  may  make  the  most  preposterous 
claims,  it  is  often  cheaper  to  pay  than  to  fight,  but  there  is  grad- 
ually accumulating  an  amount  of  righteous  indignation  that 
will  certainly  result  in  the  substitution  of  at  least  common  decency 
for  highway  robbery  in  the  administration  of  inheritance  tax 
laws. 

There  have  been  some  interesting  efforts  to  meet  the  injus- 
tice of  these  laws.  An  expedient  that  is  finding  increasing 


118  INHERITANCE  TAXES. 

favor  with  investors  is  to  keep  their  stock  certificates  of  foreign 
corporations  in  the  name  of  their  banker  or  broker.  This 
seems  not  only  an  effective,  but  a  square  and  legitimate  method 
of  preventing  the  outrage  of  double  taxation.  The  only  pos- 
sible pretext  that  a  state  has  for  levying  an  inheritance  tax 
on  stock  of  a  domestic  corporation,  owned  by  a  non-resident,  is 
that  ordinarily  it  is  necessary  to  resort  to  the  protection  of  the 
laws  of  the  state  to  transfer  the  securities,  but  if  securities  are 
held  in  such  a  way  that  it  is  not  necessary  to  transfer  them  in 
settling  an  estate,  the  state  of  incorporation  certainly  has  no 
moral  or  legal  right  to  a  transfer  tax. 

A  simple  method  of  avoiding  the  payment  of  a  collateral 
inheritance  tax  in  a  state  which  does  not  tax  direct  inheritances, 
is  found  in  an  Iowa  case  in  which  the  collateral  legatees  and  others 
interested  in  the  will,  all  united  in  renouncing  the  provisions  of  the 
will  and  agreeing  that  the  property  might  be  distributed  as  in  the 
case  of  intestacy.  The  court  upheld  their  right  to  do  this, 
with  the  result  that  the  property  passed  entirely  to  direct  heirs 
and  the  state  got  no  tax.  Though  it  was  fairly  evident  that  there 
was  some  sort  of  an  understanding  that  the  collateral  legatees 
should  not  suffer  by  their  renunciation,  the  effect  of  such  an 
understanding  was  not  passed  upon  by  the  court.1 

Other  people  have  tried  incorporating  themselves  into  a  hold- 
ing company.  To  a  man  holding  securities  in  corporations  of 
numerous  states,  this  plan  has  much  to  commend  it.  On  his 
death  his  estate  consists  simply  of  the  shares  of  the  holding 
company  in  whose  treasury  are  held  his  other  securities.  In  a 
Minnesota  case  a  man  incorporated  himself,  turned  over  all 
his  property  to  the  corporation,  issued  the  stock  to  his  family 
in  the  proportions  in  which  he  wished  them  to  share  his  property 
on  his  death,  and  then  had  the  property  leased  by  the  corporation 


'In  re  Stone,  132  la.  136. 


INHERITANCE  TAXES.  119 

back  to  him  for  his  life.  This  family  did  not  pay  any  inheritance 
tax.1 

Such  devices  are,  however,  not  common,  and  only  worth 
while  for  large  estates.  For  the  estate  of  ordinary  size  inheri- 
tance taxation  is  frequently  not  taxation,  but  legalized  or  "offi- 
cialized" robbery. 

We  have  spoken  of  double  and  triple  taxation.  If  a  man 
lives  in  one  state  and  has  stock  in  a  corporation  organized  in 
another  state,  which  does  all  its  business  in  a  third  state,  and 
keeps  his  stock  in  a  safe  deposit  box  in  a  fourth  state,  his  estate 
may  be  obliged  to  pay  a  full  inheritance  tax  four  times.  The 
first  state  may  be  any  one  of  38;  the  second  state  any  one  of 
at  least  24,  the  third  state  any  one  of  nine  and  the  fourth  state 
any  one  of  half  a  dozen. 


!State  v.  Probate  Court,  102  Minn.  268. 


CHAPTER  X. 
CANADA. 

Corporations  may  be  organized  either  under  the  laws  of 
the  Dominion  or  under  the  laws  of  the  different  Provinces. 
The  Provinces  have  the  power  to  incorporate  companies,  and 
these  companies  have  power  to  do  business  anywhere  they  wish. 
Apparently  there  is  no  difference  as  far  as  succession  duties  go 
whether  the  companies  are  incorporated  under  the  laws  of  a 
Province  or  under  the  laws  of  the  Dominion. 

The  Dominion  government  collects  no  tax  but  the  Prov- 
inces do.  The  local  law  does  not  allow  transfers  of  stock  without 
the  payment  of  succession  duties  to  the  Province  in  which  the 
registry  office  of  the  company  is  located.  The  fact  that  the 
companies  are  incorporated  by  the  Dominion  government  ap- 
parently makes  no  difference.  This  might  raise  an  important 
constitutional  question  as  to  whether  or  not  the  Provinces  have 
power  to  tax  such  transfers,  but  the  courts  have  held  that  the 
Provinces  have  the  power  to  impose  a  license  fee  on  a  company 
incorporated  by  the  Dominion  doing  business  within  the  sepa- 
rate Provinces,  so  on  the  same  principle,  it  would  seem  that  the 
taxation  would  be  held  constitutional. 

An  American  estate  owning  stock  of  Canadian  Pacific, 
which  is  incorporated  by  the  Dominion  government,  would  have 
to  pay  succession  duties  to  the  Province  of  Quebec,  where  there 
is  a  registry  office;  that  is,  if  the  stock  was  on  the  Quebec  reg- 
istry. Canadian  Pacific  also  has  a  registry  in  London,  and  if 
the  stock  was  on  the  London  registry,  this,  of  course,  would  not 
apply. 


INHERITANCE  TAXES.  121 

A  resident  of  Montreal  who  owns  shares  or  bonds  of  an 
American  railroad  would  pay  an  inheritance  tax  to  the  Province 
of  Quebec  in  addition  to  what  he  might  have  to  pay  in  the  States. 

There  is  an  important  case  (Lovitt  v.  The  King)  which 
is  to  be  argued  in  July,  1911,  before  the  Privy  Council.  In  this 
case  a  resident  of  Nova  Scotia  had  money  on  deposit  at  the  branch 
of  the  Bank  of  British  North  America  in  St.  John,  New  Bruns- 
wick, which  had  issued  a  deposit  receipt  not  restricted,  however, 
to  payment  by  that  specific  branch,  and  the  bank  had  also 
branches  in  Nova  Scotia.  The  question  came  up  as  to  whether 
there  would  be  a  liability  for  a  succession  duty  to  New  Bruns- 
wick as  well  as  Nova  Scotia.  The  New  Brunswick  Court  held 
that  New  Brunswick  could  collect  succession  duties,1  the  Supreme 
Court  of  Canada,  with  two  judges  dissenting,  held  it  could  not.2 

The  following  schedule  of  rates  and  exemptions  is  taken  from 
the  Report  of  the  Inheritance  Tax  Law  Committee  at  the  In- 
ternational Tax  Conference,  1910. 


Direct  '. 
Province                   Rate 
Alberta   li~~  5 

Inheritances 
Exemption 
$25,000 
25,000 
4,000-25,000 
50,000 
25,000 
50,000 
10,000 
5,000 
25,000 

Collateral  Inheritances 
Rate        Exemption 
5  -10                    5,000 
5  -10                            0 
1  -10       2,000-  7,000 
5  -10*     5,000-10,000 
5  -10                    5,000 
1  -10                  10,000 
2£-  7£                  3,000 
5  -15f                         0 
5  -10                    5,000 

British  Columbia.  l£-  5 
Manitoba        ....  1  —10 

New  Bru  nswick  .  .  .  lj-  5 
Nova  Scotia  2£—  5 

Ontario        1  -10 

Prince  Edward  Is  ,  lj-  2£ 
Quebec  1  —  8 

Saskatchewan  .  .  .  l£-  5 

*To  persons  residing  out  of  Providence  rate  is  doubled. 

fTo  person  residing  out  of  the  British  Empire  an  additional  5%. 


!King  v.  Lovitt,  37  N.  B.  R.  558. 

2King  v.  Lovitt,  43  S.  C.  R.  106. 

The  principal  other  Canadian  cases  are  as  follows: 

Attorney  General  v.  Newman,  1  O.  L.  R.  (Ont.)  51. 

In  re  McDonald,  9  B.  C.  R.  174. 

Lambe  v.  Manuel,  1903,  App.  Cas.  68. 

Woodworth  v.  Atty.  Gen'l.,  1908,  App.  Cas.  508. 


122  INHERITANCE  TAXES. 

Among  the  important    companies  organized  under  the  laws 
of  the  Dominion  of  Canada  are: 

Canadian  Pacific 
Canadian  Southern 
Mexican  Light  &  Power 

Under  laws  of  Provinces  are: 

Dominion  Coal  (Nova  Scotia) 
Dominion  Iron  &  Steel  (Nova  Scotia) 
Granby  (British  Columbia) 
Montreal  Lt.  H.  &  P.  (Quebec) 
Montreal  St.  Ry.  (Quebec) 
Sao  Paulo  Tr.  Lt.  &  P.  (Ont.) 


APPENDIX. 


The  following  is  an  editorial  from  the  Boston  News  Bureau 
of  Feb.  18,  1911: 

ROBBING  HEN  ROOSTS. 

Radical  legislatures  have  been  running  riot  in  taxing  in- 
heritances since  Mr.  Roosevelt  in  1906  advocated  the  employ- 
ment of  a  high  progressive  inheritance  tax  as  a  means  of  se- 
questering "swollen  fortunes." 

In  theory  an  inheritance  tax  is  said  to  be  not  a  property  tax 
but  a  tax  on  the  right  to  transmit  or  succeed  to  property;  a 
right  which  the  state  protects  and  therefore  taxes.  It  is  hard 
to  find  in  this  protection  anything  to  justify  a  25%  rate. 

A  moderate  tax,  especially  on  collateral  inheritances,  is 
usually  thought  to  be  an  inoffensive  method  of  raising  revenue. 
The  apologists  for  the  exorbitant  progressive  rates  that  have 
become  so  common  urge  that  they  will  break  up  and  return  to  the 
community  the  great  fortunes  that  it  is  supposed  have  been 
acquired  by  illegal  or  extra-legal  means.  That  is  the  argument 
of  the  demagogue  and  forgets  that  the  tax  is  not  limited  to  tainted 
fortunes. 

Again  it  is  said  that  property  is  reached  that  has  been  es- 
caping taxation  during  the  lifetime  of  the  owner.  But  the 
property  that  has  paid  its  full  share  of  taxes  is  reached  at  the 
same  time. 

Most  of  the  talk  about  property  escaping  taxation  is  pure 
buncombe.  Property  that  escapes  taxation  is  a  rarity.  Much 
property  escapes  double  taxation  in  states,  like  Massachusetts, 
that  have  a  personal  property  tax  which  is  in  effect  nothing  more 
than  an  income  tax  of  30%  to  40%  designed  to  be  levied  almost 
exclusively  on  the  property  of  widows  and  orphans. 

An  inheritance  tax  is  essentially  a    cowardly  tax.       The 


126  APPENDIX. 

state,  like  a  great  bully,  takes  away  from  the  family  a  portion 
of  its  property  at  a  time  when  it  is  most  needed,  and  at  the  time 
when  the  property  has  lost  the  service  of  its  natural  protector. 

There  are  few  men  with  an  income  of  $10,000  a  year  who 
leave  more  than  $50,000  to  their  families.  It  is  considered 
proper  to  seize  a  substantial  part  of  this  from  the  family  that 
is  trying  to  readjust  itself  to  an  income  reduced  to  $2500  a  year 
or  less. 

Lloyd-George  in  England  was  at  least  honest  when  he  de- 
scribed estates  of  deceased  owners  as  convenient  "hen  roosts" 
to  rob. 

It  has  become  common  for  states  to  levy  inheritance  taxes 
on  the  property  of  men  who  never  set  foot  within  the  state  and 
never  owned  a  dollar's  worth  of  property  physically  within  the 
state,  because  under  our  methods  of  corporate  organization  a 
convenient  "hen  roost"  is  provided. 

There  used  to  be  something  said  about  "Taxation  without 
Representation."  The  resentment  against  a  tax  that  did  not 
begin  to  be  as  unfair  as  the  current  inheritance  taxes  once  found 
expression  in  a  certain  Tea  Party. 

Where  is  the  line  between  a  tax  dodger  and  a  patriot? 


LIST  OF   CORPORATIONS. 


The  following  is  a  list  of  some  of  the  more  prominent  com- 
panies, showing  the  state  in  which  they  are  incorporated,  and 
the  exchange  where  their  securities  are  listed.  Those  marked  * 
are  not  corporations,  but  joint  stock  companies  or  voluntary 
associations. 

State  where  incorp. 

Name  of  Co.  Exchange          or  organized 

Acushnet  Mills Mass. 

Adams  Express N.  Y.  N.  Y.* 

Adventure Boston  Mich. 

Ahmeek Boston  Curb  Mich. 

Algomah  .  .  . Boston  Mich. 

Allis-Chalmers   N.  Y.  N.  J. 

Allouez    Boston  Mich. 

Amalgamated  Copper Boston,  N.  Y.  N.  J. 

Am.  Agricultural  Chem.  .  .  .  Boston,  N.  Y.  Conn. 

American  Beet  Sugar N.  Y.  N.  J. 

American  Brake  &  Fy N.Y.  N.J. 

American  Brass    Conn. 

American  Can    N.Y.,Chic.  N.J. 

American  Car  &  Fy N.  Y.  N.J. 

American  Cement    N.J. 

American  Cotton  Oil Boston,  N.  Y.  N.J. 

American  Express    N.  Y.  N.  Y.* 

American  Glue Mass. 

American  Hide  &  Leather  ..  N.Y.  N.J. 

American  Ice  Securities  ....  N.Y.  N.J. 

American  Light  &  Traction  N.Y.  N.J. 

American  Linen Mass. 

American  Linseed    N.Y.  N.J. 

American  Locomotive N.Y.  N.Y. 

American  Malt N.Y.  N.J. 

American  Manufacturing  .  .  Mass. 

American  Pneumatic  Ser.  ..  Boston  Del. 

American  Radiator    Chic.  N.J. 

American  Railways N.J. 

American  Screw R.I. 

American  Sewer  Pipe Pitts.  &  Clev.  N.  J. 

American  Shipbuilding   ....  Chic.  N.J. 

American  Silk N.Y. 

American  Smelters  Sec.  .  N.Y.  N.J. 


INHERITANCE  TAXES. 


State  where  incorp. 

Name  of  Co.  Exchange          or  organized 

American  Smelt  &  Ref N.  Y.  N.  J. 

American  Snuff N.Y.  N.J. 

American  Soda  Fountain    ..  N.J. 

American  Steel  Foundries  ..  N.Y.  N.J. 

American  Sugar Boston,  N.  Y.        N.  J. 

American  Tel.  &  Tel Boston,  N.  Y. 

Chic.  Phila.         •  N.  Y. 

American  Thread N.J. 

American  Tobacco N.Y.  N.J. 

American  Typefounders  Chic.  N.J. 

American  Woolen  Boston,  N.Y.         N.J. 

American  Writing  Paper  ...  N.Y.  N.J. 

American  Zinc    Boston  Me. 

Amoskeag  Mfg N.  H. 

Anaconda  Copper    Boston,  N.  Y.        Mont. 

Androscoggin  Mills Me. 

Ann  Arbor N.Y.  Mich. 

Arizona  Commercial Boston  Me. 

Arkansas  Midland Ark. 

Arkansas  Southwestern  ....  Ark. 

Arkwright  Mills Mass. 

Arlington  Mills Mass. 

Armour  and  Co 111. 

Arnold Boston  Mich. 

Associated  Merchants N.Y.  Conn. 

Associated  Oil Los.  Ang.  Cal. 

Atchison,Top.&S.  F Boston,  N.Y.        Kan. 

Atlantic  Coast  Line N.  Y.,  Bait.  Va. 

Atl.  Gulf  &  W.  Indies   Boston  Me. 

Atlantic  Mills R.  I. 

Atlantic  Mining Boston  Mich. 

Atlas  Portland  Cement  ....  Pa. 

Baker  Co.  (Walter)  Mass. 

Baltimore  &  Ohio N.Y.  Md.,Va. 

Bangor  &  Aroostook    Me. 

Barnaby  Mfg Mass. 

Barnard  Mfg Mass. 

Bates  Mfg Me. 

Batopilas  Mfg Boston,  N.  Y.        N.  Y. 

Berkshire  Mfg Mass. 

Bethlehem  Steel N.Y.  N.J. 

Bigelow  Carpet    Mass. 

B'mgh'm  Ry.  Lt.  &  Power  .  Ala. 

Bonanza   Boston  Colo. 

Boott  Mills Mass. 

Borden  Mfg Mass. 


INHERITANCE  TAXES. 


129 


States  where  incorp. 

Name  of  Co.  Exchange  or  organized 

Boston  &  Albany   Boston  Mass.,  N.  Y. 

Boston  &  Corbin    Boston  Me. 

Boston  &  Lowell Boston  Mass. 

Boston  &  Maine Boston  Mass.  N.H.  Me. 

Boston  &  Northern    Boston  Mass. 

Boston  &  Providence Boston  Mass. 

Boston  Belting ,  .  .  .  .  Mass. 

Boston  Duck    Mass. 

Boston  Elevated    Boston  Mass. 

Boston  Revere  B.  &  Lynn  .  .  Boston  Mass. 

Boston  Suburban Boston  Mass. 

Boston  Wharf Mass. 

Boston  Woven  Hose    Mass. 

Brill  Co.  (J.  G.)   Phila.  Pa. 

Brooklyn  Rapid  Transit  .  .  .  N.  Y.  N.  Y. 

Brooklyn  Union  Gas N.  Y.  N.  Y. 

Buffalo,  Rochester  &  Pitts.  N.  Y.  N.  Y.,  Pa. 

Bush  Terminal N.  Y. 

Butler  Mill Mass. 

Butte-Ballaklava Boston  Ariz. 

Butte  Coalition    Boston  N.  J. 

Butterick  Co N.  Y.  N.  Y. 

Calumet  &  Arizona    Boston  Ariz. 

Calumet  &  Hecla Boston  Mich. 

Cambria  Steel Phila.  Pa. 

Canada  Sou  them N.Y.  Dom.  of  Canada 

Canadian  Pacific    N.  Y.  Dom  of  Canada 

Capital  Traction    Wash.  Dist  of  Columbia 

Centennial    Boston  Mich. 

Central  Coal  &  Coke Phila.  St.  Louis       Mo. 

Central  of  Georgia N.  Y.  Ga. 

Central  of  New  Jersey N.  Y.,  Phila.  N.  J. 

Central  Leather N.Y.  N.J. 

Central  Pacific Utah 

Central  Vermont Boston  Vt. 

Central  &  So.  Am.  Tel N.Y.  N.Y. 

Chapman  Valve Mass. 

Chesapeake  &  Ohio N.Y.  Va. 

Chicago  &  Alton N.Y.  111. 

Chicago  &  Eastern  Illinois    .  Boston  111. 

Chicago  &  Northwestern    ..N.Y.  III.,  Wis.,  Mich. 

Chicago,  Bur.  &  Quincy .  ...  111. 

Chicago  Great  Western N.Y.  111. 

Chic.  Jun.Rys.&Stk.  Yds.  Boston  N.J. 

Chicago,  Mil.  &  St.  Paul  ...  N.Y.  Wis. 

Chicago  Pneumatic  Tool  .  .  .  Chicago  N.J. 


130 


INHERITANCE  TAXES. 


State   where  incorp. 

Name  of  Co.  Exchange  or  organized 

Chicago  Railways    Chicago  111. 

Chicago,  R  I  &  Pac  R  R  Co.  Iowa 

Chicago  R  I  &  Pac  Ry  Co.    .  111.  &  Iowa 

Chic.,  St.  Paul  Minn. &Om.  N.Y.  Wis. 

Chicago  Subway    Chicago  N.  J. 

Chicago  Telephone    Chicago  111. 

Chicopee  Mfg Mass. 

Cinn.  Hamilton  &  Dayton .  .  Ohio 

Clev. ,  Cinn.  Chic. ,&  St.  L.  N.Y.  Ohio&Ind. 

Colorado  Fuel  &  Iron    N.Y.  Colo. 

Colorado  &  Southern N.  Y.,  Boston         Colo. 

Columbus  &  Hocking  C  &  I  N.Y.  Ohio 

Commonwealth-Edison    .  .  .  Chicago  111. 

Con.  &  Claremont  (  B  &  M)  N.  H. 

Con.  &  Montreal  (B  &  M)    .  Boston  N.  H. 

Con.&Portsm'th(B&  M)  .  N.H. 

Conn  &  Pass.  Riv.  (B&M).  Boston  Vt. 

Connecticut  River  (B.  &  M.)  Boston  Mass.,  N.  H. 

Connecticut  Ry.  &  Light    .  .  Conn. 

Consolidated  Cotton  Duck  .  Del. 

Consolidated  Gas N.Y.  N.  Y. 

Con.GasElecLt&P(Balt)  Bait.  Md. 

Consolidated  Mercur N.Y.  N.J. 

Consolidation  Coal Bait.  &St.  Louis     Md. 

Continental  Mills Me. 

Copper  Range  Consolidated  Boston  N.J. 

Corn  Products    N.  Y.,  Chicago        N.  J. 

Cornell  Mills Mass. 

Cramp  Shipbuilding    Phila.  Pa. 

Crex  Carpet   N.Y.  Del. 

Crucible  Steel •  Pitts.  N.  J. 

Cuban  American  Sugar  ....  N.Y.  N.J. 

Cumberland  Tel.  &  Tel Boston  Ky. 

Daly-West    Boston  Colo. 

Dartmouth  Mfg Mass. 

Davis  Mills Mass. 

Delaware  &  Hudson    N.Y.  N.Y. 

Delaware ,  Lack .  &  West .  N.Y.  Pa . 

Denver  &  Rio  Grande N.Y.  Col.  &  Utah 

Detroit  United N.  Y.,  Cinn.  Cle.  Mich. 

Diamond  Match    Chicago  111. 

Distillers  Securities N.Y.  N.J. 

Dominion  Coal Montreal  Nova  Scotia 

Dominion  Iron  &  Steel    ....  Montreal  Nova  Scotia 

Draper  Co Me. 

Duluth  So.  Shore  &  Atlantic  N.Y.  Mich.,  Wris. 


INHERITANCE  TAXES. 


131 


State  where  incorp. 

Name  of  Co.  Exchange  or  organized 

Duluth-Superior  Traction    .  N.  Y.  Conn. 

Dupont  Powder N.Y.,Chic.  N.  J. 

Dwight  Mfg Mass. 

East  Boston  Co Boston  Mass. 

East  Butte    Boston  Ariz. 

Eastern  Steamship Boston  Me. 

Eastman  Kodak Rochester  N.  J. 

Edison  Co Boston  Mass. 

Edwards  Mfg Me. 

Electric  Storage  Battery. .  . .  Phila.  N.  J. 

Elgin  Watch Chicago  111. 

Elm  River  Copper Boston  N.  J. 

Erie N.Y.  N.  Y. 

Essex  Co Mass. 

Everett  Mills    Mass. 

Fairbanks  &  Co Vt. 

Federal  Min.  &  Smelting    .  .  N.Y.  Del. 

Fisher  Mfg "...  Mass. 

Fitchburg  Railroad Boston      Mass.,  N.H.,Vt.&N.Y. 

Flint  Mills Mass. 

Fore  River  Shipbuilding  ...  Mass. 

Franklin  Co Me. 

Franklin  Mining Boston  Mich. 

Franklin  &  Tilton  (B  &  M)  .  N.  H. 

Galveston  Hous.  Elec.  Co.  .  Boston  Me. 

General  Asphalt  .  . Phila.  N.  J. 

General  Chemical N.Y.  N.Y. 

General  Electric Boston,  N.Y.          N.  Y. 

General  Motors    Chic.,  Clev.  N.  J. 

Giroux Boston  Del. 

Goldfield  Consolidated N.  Y.,  Los  Ang.      Wyo. 

Gorham  Mfg R.  I. 

Gosnold  Mills Mass. 

Granby Boston,  N.  Y:          Brit.  CoL 

Granite  Mills    Mass. 

Great  Falls  Mfg N.  H. 

Great  Northern    N.Y.  Minn. 

Great  Northern  Ore N.Y.  Minn.* 

Greene-Cananea Boston  Minn. 

Grinnell  Mfg Mass. 

Hamilton  Mfg Mass. 

Hamilton  Woolen    Mass. 

Hancock Boston  Mich. 

Hargraves  Mills Mass . 

Harmony  Mills Mass. 

Havana  Electric  .  N.Y.  N.  J. 


132 


INHERITANCE  TAXES. 


State  where  incorp. 

Name  of  Co.  Exchange  or  organized 

Helvetia    Boston  Ariz. 

Hey  wood  Bros .  &  Wakefield  N.J. 

Hill  Mfg Me. 

Hocking  Valley  N.  Y.  Ohio 

Hood  Rubber Mass. 

Illinois  Brick Chicago  111. 

Illinois  Central N.  Y.  111. 

Illinois  Traction Me. 

Independent  Brewing Pitts.  Pa. 

Indiana  Lighting Ind. 

Indiana  Mining   Boston  Mich. 

Ingersoll  Rand N.  Y.  N.J. 

Inspiration  Copper    Boston  Me. 

Interboro-Metropolitan  N.  Y.  N.  Y. 

Interboro  Rapid  Transit  .  .  .  N.  Y.  N.  Y. 

International  &  Great  Nor  .  Texas 

International  Button  Hole  .  Boston  Me. 

International  Harvester.  ...  N.  Y.  N.  J. 

International  Mer.  Marine  .  N.  Y.  N.J. 

International  Nickel N.  J. 

International  Paper N.  Y.,  Boston         N.  Y. 

International  Power    N.  Y.  N.J. 

International  Silver N.J. 

International  Smelt  &  Ref    .  Boston  N.  J. 

International  Steam  Pump  .  N.Y.  N.J. 

International  Traction   ....  N.J. 

Iowa  Central    N.  Y.,  Boston         111. 

Island  Creek  Coal    Boston  Me. 

I  de  Royale  Copper    Boston  N.J. 

Jacksonville   Traction Mass. 

Jones  &  Laughlin  Steel    ....  Pa. 

Kanawha  &  Michigan Ohio,  W.  Va. 

Kansas  City,  Ft  Scott&Mem  N.  Y.,  Boston          Kan. 

Kansas  City,  Mex.  &  Orient  Kan. 

Kansas  City  Ry.  &  Light   .  .  Chicago  N.J. 

Kansas  City  Southern N.Y.  Mo. 

Kerr  Lake Boston  N.  Y. 

Keweenaw    Boston  Mich. 

Lackawanna  Steel N.Y. 

LacledeGas    N.  Y.,  St.  Louis      Mo. 

Lake  Copper Boston  Mich. 

Lake  Erie  &  Western N.Y.  111. 

Lake  Shore  &  Mich.  Sou.    ..  N.Y.  111.,  Ohio,  Mich, 

Ind,  Pa,  N.  Y. 

Lake  Superior  Corp Phila.  N.  J. 

La  Salle  Copper Boston  Mich. 


INHERITANCE  TAXES. 


133 


Name  of  Co.  Exchange 

Lancaster  Mills    

Lanett  Cotton  Mills    

Laurel  Lake  Mills    

Laurium  Mining    

Lawrence  Mfg 

Lehigh  Coal  &  Navigation    .      Phila. 

Lehigh  Valley     N.  Y.,  Phila. 

Long  Island  R.R N.Y. 

Lorraine  Mfg 

Louisiana  &  Arkansas 

Louisville  &  Nashville N.Y. 

Lowell  Bleachery 

Luther  Mfg 

Lyman  Mills 

Mackay  Cos N.Y. 

Maine  Central    Boston 

Manchester  &  Keene  (B  &  M) 

Man.  &  Lawrence  (B&M)    .      Boston 

Manhattan  Elevated N.Y. 

Manomet  Mills    

Manufacturers  Lt.  &  Heat   .      Pitts. 

Mass  Consolidated    Boston 

Massachusetts  CottonMills 
Mass  Cot.  Mills  in  Georgia  . 

Mass.  Electric    Boston 

Mass.  Gas     Boston 

Maverick  Mills 

Mayflower  Mining Boston 

McElwain  Co.,  W.  H 

Mergenthaler  Linotype  ....      Boston 

Met.  West  Side  Ry Chicago 

Mexican  Lt.  &  Power    Montreal 

Mexican  Tel.  &  Tel Boston 

Mexico  Cons Boston 

Miami Boston 

Michigan  Central N.Y. 

Michigan  Mining Boston 

Michigan  State  Tel Chicago 

Middlesex  Co 

Minneapolis  &  St.  Louis  ...      N.Y. 
Minneapolis  Gen.  Electric    .      Boston 
Minn.,  St.  Paul  &S.S.M.  .      N.Y. 
Missouri,  Kansas  &  Texas    .      N.Y. 

Missouri  Pacific N.Y. 

Mobile  Electric    

Mohawk  Mining    Boston 


State  where  incorp. 
or  organized 
Mass. 
Ala. 
Mass. 
Mich. 
Mass. 
Pa. 
Pa. 
N.Y. 
R.I. 
Ark. 
Ky. 
Mass. 
Mass. 
Mass. 
Mass.* 
Me. 
N.H. 
N.H. 
N.Y. 
Mass. 
Pa. 
Mich. 
Mass. 
Mass. 
Mass.* 
Mass.* 
Mass. 
Mich. 
Mass. 
N.Y. 
111. 

Dom.  of  Canada 
Me. 
Me. 
Del. 
Mich. 
Mich. 
Mich. 
Mass. 
Minn.  la. 
N.J. 

Min.  Wis.  &  Mich. 
Kan. 

Mo.  Kan.  Neb. 
Ala. 
Mich. 


134 


INHERITANCE  TAXES. 


Name  of  Co .  Exchange 

Montreal  Lt.,  Heat  &  Power  Montreal 

Montreal  St.  Ry Montreal 

Narragansett  Mills    

Nashawena  Mills 

Nashua  Mfg 

Nash.  &  Act  (B.  &  M.)  ... 
Nashua*  Lowell  (B.&M.)  . 

Nash.,  Chat.  &  St.  Louis    ..  N.Y. 

National  Biscuit N.Y. 

National  Carbon    Chic.,  Boston 

National  Enameling  &  Sta .  .  N .  Y . ,  St .  Louis 

National  Fire  Proofing    ....  Pitts. 

National  Lead    N.Y. 

National  Rail  ways  of  Mex.  .  N.Y. 
Naumkeag  Steam  Cotton  .. 

Nevada  Consolidated    Boston,  N.Y. 

New  Arcadian    Boston 

New  Central  Coal    

New  England  Cotton  Yarn  .  Boston 
NewEngland  Navigation..  . 

New  England  Tel .  &  Tel Boston 

New     River     Fuel 

New  York  Air  Brake  N.Y. 

New  York  Central N.Y. 

N.  Y.,  Chi.  &  St.  Louis  ....  N.Y.  N.Y 

New  York  Dock N.Y. 

N.  Y.,  N.  H.  &  H N.  Y.,  Boston 

N.Y.,Ont.&  Western N.Y. 

N.  Y.  Susquehanna  &  West.  Phila. 

New  York  Telephone    

Newmarket  Mfg 

Nicholson  File    

Niles-Bement-Pond 

Nipissing Boston 

Norfolk  &  Western    N.Y. 

North  American  Co N.  Y.,St.  Louis 

North  Butte Boston 

North  Lake Boston 

Northern  Central Phila.,  Bait. 

Northern  Ohio  Lt.  &Trac.  .  Clev.,  Cinn. 

Northern  Pacific    N.Y. 

Northern  R.  R.  (B.&M.) . .  .  Boston 

Northern  Securities 

Northern  Texas  Electric  .  .  .  Boston 

Ojibway    Boston 


State  wherefincorp. 


or  organized 
Quebec 
Quebec 
Mass. 
Mass. 
N.H. 

N.H.,Mass. 
N.H.,Mass. 
Tenn. 
N.J. 
N.J. 
N.J. 
Pa. 
N.J. 
Mex. 
Mass. 
Me. 
Mich. 
Md. 
Mass. 
Conn. 
N.Y. 
W.  Va. 
N.J. 
N.Y. 

,,  Ohio,  Ind.,  Pa. 
N.Y. 

Conn.,  Mass., 
R.I. 
N.Y. 
N.J.,Pa. 
N.Y. 
Mass. 
R.I. 
N.J. 
Me. 
Va. 
N.J. 
Minn. 
Mich. 
Pa.,  Md. 
Ohio 
Wis. 
N.H. 
N.J. 
Me. 
Mich. 


INHERITANCE  TAXES. 


135 


State  where  incorp. 

"Name  of  Co.  Exchange  or  organized 

Old  Colony  Copper    Boston  Mich. 

Old  Colony  R.  R Boston  Mass. 

Old  Dominion Boston  Me. 

Oregon  &  California Ore. 

Oregon  Short  Line   Ore. 

Ore. -Wash.  Railroad  &  Nav.  Ore. 

Osceola    Boston  Mich. 

Otis  Elevator    Chicago  N.  J. 

Pacific  Coast  Co N.Y.,  Boston  N.J. 

Pacific  Gas  &  Electric Cal. 

Pacific  Mail    N.  Y.  N.  Y. 

Pacific  Mills Mass. 

Pacific  Telephone  &  Tel.  ...  N.  Y.  Cal. 

Parker  Mills Mass. 

Parrot  Mining    Boston  Mont. 

Pennsylvania N.  Y.,  Phila.  Pa. 

Pennsylvania  Coal  &  Coke  .  Pa. 

Pennsylvania  Steel    Phila.  N.  J. 

Peoples  Gas N.  Y.,  Chicago  111. 

Peoria  &  Eastern N.  Y.  111. 

Pepperell  Mfg Me. 

Pere  Marquette N.  Y.  Mich.,  Ind. 

Philadelphia  Co N.  Y.,  Phila.  Pa. 

Philadelphia  Electric Phila.  N.J. 

Philadelphia  Rapid  Transit  Phila.  Pa. 

Pierce  Mfg Mass. 

Pitts. ,Cin.,  Chic. ,&  St.  L.  N.Y.,  Phila.  Pa.,W.Va,  Ohio 

Ind.,  111. 

Pittsburg  Brewing Pitts.  Pa. 

Pittsburg  Coal N.  Y.  N.J. 

Pitts.,  Ft.  Wayne  &  Chicago  Ohio,  Ind.,  III.,  &  Pa. 

Pittsburg  Plate  Glass    Pitts.  Pa. 

Plymouth  Cordage    Mass. 

Pocasset  Mfg Mass. 

Pope  Mfg Conn. 

Pressed  Steel  Car N.  Y.  N.  J. 

Pullman    N.  Y.,  Bos.,  Chi.    111. 

Quaker  Oats   N.J. 

Quicksilver  Mining N.  Y.  N.  Y. 

Quincy  Mining Boston  Mich. 

Railway  Steel  Spring N.  Y.  N.J. 

Ray  Consolidated    Boston  Me. 

Reading N.  Y.,  Phila.  Pa. 

Reece  Button  Hole    Boston  Me. 

Reece  Folding  Macine Boston  Me. 

Renfrew  Mfg Mass. 


136 


INHERITANCE  TAXES. 


State  where  incorp. 

Name  of  Co.  Exchange  or  organized 

Republic  Iron  &  Steel    N.Y.  N.J. 

Revere  Sugar   Me. 

Rock  Island  Co N.Y.  N.J. 

Rotary  Ring Boston  Del. 

Rutland  R.  R Boston,  N.  Y.          Vt.,  N,  Y. 

Sagamore  Mfg Mass. 

St.  Joseph  &  Grand  Island..  N.Y.  Kan.,  Neb. 

St.  Louis  &  San  Francisco  .  .  N.Y.  Mo. 

St.  Louis  Southwestern  ....  N.Y.  Mo. 

St.  Mary's  Mineral  Land    ..  Boston  N.J. 

S.  Pedro,  Los  Ang.  &  Salt  L.  Utah 

Santa  Fe  Gold  &  Copper  .  .  .  Boston  N.J. 

Sao  Paulo  T.  L.  &  Power    .  .  Montreal  Ont. 

Savannah  Electric Boston  Ga. 

Scovill  Mfg Conn. 

Seaconnet  Mills Mass. 

Seaboard  Air  Line    Va. 

Sears-Roebuck N.  Y.,  Chicago        N.  Y. 

Seneca  Mining Mich. 

Shannon  Copper    Boston  Del. 

Shattuck-Arizona    Boston  Minn. 

Shaw  Stocking Mass. 

Shawinigan  Water  &  Power .  Quebec 

Singer  Mfg    N.Y. 

Slater  Mills Mass. 

Sloss-Sheffield N.Y.  N.J. 

South  Utah Boston  Me. 

Southern  Pacific N.Y.  Ky. 

Southern  Railway    N.  Y.,  Bait.  Va. 

Standard  Cordage N.Y. 

Standard  Oil N.Y.  Curb  N.  J. 

Standard  Screw    N.J. 

Stevens  Mfg Mass. 

Submarine  Signal Me. 

Sullivan  County  R.  R N.  H. 

Suncook  Mills Mass. 

Superior  Copper Boston  Mich. 

Superior  &  Boston   Boston  Ariz. 

Superior  &Pittsburg Boston  Minn. 

Swift  &  Co Boston  III. 

Tamarack Boston  Mich. 

Tecumseh  Mills Mass. 

Tennessee  Central   Tenn. 

Tennessee  Coal,  Iron  &  R.  R.  N.Y.  Tenn. 

Tennessee  Copper   Boston,  N.  Y.         N.  J. 

Terre  Haute,  Ind.  &  East  .  Ind. 


INHERITANCE  TAXES. 


137 


State  where  incorp. 

Name  of  Co.  Exchange  or  organized 

Terre  Haute  Trac.  &  Light  .  Ind. 

Texas  Central Texas 

Texas  Co N.  Y.  Texas 

Texas  Pac.  Land  Trust N.  Y.  Tex.* 

Texas  &  Pacific N.  Y.,  Phila.  U.  S. 

Third  Avenue N.  Y.  N.  Y. 

Thorndike  Co Mass. 

Toledo  Ry.  &  Light N.  Y.  Cinn.  Clev.   Ohio 

Tol.  St.  Louis  &  Western    ..  N.  Y.  Ind. 

Tonopah  Mining    Phila.  Del. 

Torrington    Boston  Me. 

Tremont&Suffolk  Mills Mass. 

Twin  City  Rapid  Transit    . .  N.  Y.  N.  J. 

Union  Bag  &  Paper N.  Y.  N.  J. 

Union  Cotton  Mfg Mass. 

Union  Mills Me. 

Union  Pacific    N.  Y.,  Boston  Utah 

Union  Switch  &  Signal    ....  Pa. 

Union  Traction  (Phila.)    .  .  .  Phila.  Pa. 

United  Box  Board Chicago  N.  J. 

United  Cigar  Mfgrs N.  Y.  N.  Y. 

United  Dry  Goods N.  Y.  Del. 

United  Fruit Boston  N.  J. 

United  Gas  Improvement  ..  Phila.  Pa. 

United  Railways  Investment  N.Y.,  Phila.  N.  J. 

United  Shoe  Machinery    .  .  .  Boston  N.  J. 

U.S.  Cast  Iron  Pipe    N.  Y.  N.  J. 

U.  S.  Envelope Me. 

U.S.  Express N.  Y.  N.  Y.* 

U.S.  Finishing     Conn. 

U.S.  Industrial  Alcohol    ...  W.  Va. 

U.S.Lt.&  Heating N.  Y.  Curb.  Me. 

U.  S.  Realty  &  Improvement  N.  Y.  N.J. 

U.S.Red.&Ref N.  Y.  N.J. 

U.S.  Rubber    N.Y.&  Boston  N.J. 

U.  S.  Smelt. ,  Ref.  &  Mining  Boston  Me. 

U.S.  Steel N.Y.,  Boston  N.J. 

U.  S.  Worsted Me. 

United  Verde    W.  Va. 

Utah  Apex    Boston  Me. 

Utah  Consolidated Boston  N.  J. 

Utah  Copper N.Y.,  Boston  N.J. 

Vandalia Ind.,  111. 

Vermont  Val.  R.  R.  (B.&M.)  Vt. 

Victoria  Copper Boston  Mich. 

Virginia-Carolina  Chemical .  N.Y.  N.J. 


138 


INHERITANCE  TAXES. 


Name  of  Co.  Exchange 

Va.  Iron  Coal  &  Coke   N.  Y. 

Virginian  Railway 

Vulcan  Detinning    N.  Y. 

Wabash N.  Y. 

Wab.-Pitts  Terminal 

Wamsutta  Mills '.-.... 

Washington  Ry.  &  Elec.  .  .  . 

Wells-Fargo   N.  Y. 

West  End  Street  Ry Boston 

Western  Maryland    N.  Y. 

Western  Electric    Chicago 

Western  N.  Y.  &  Penn.  Ry.      Phila. 

Western  Tel.  &  Tel Boston 

Western  Union N.  Y. 

Westinghouse  Elec.  &  Mfg.       N.  Y. 

Wheeling  &  Lake  Erie N.  Y. 

Whitman  Mills 

Wilton  R.  R 

Winona Boston 

Winthrop  Mills    

Wisconsin  Central   N.Y.&  Boston 

Wolverine Boston 

Wyandot Boston 

Yazoo  &  Miss.  Valley   

York  Mfg 


State  where  incorp. 
or  organized 
Va. 
Va. 
N.J. 
111.,  Ind., Mich., 

Mo.,  Ohio 
Pa.,  Ohio,  W. 

Va. 
Mass. 

District  Col. 
Colo. 
Mass. 
Md. 
111. 

Pa.,  N.  Y. 
N.J. 
N.Y. 
Pa. 
Ohio 
Mass. 
N.H. 
Mich. 
Me. 
Wis. 
Mich. 
Mich. 
Miss. 
Me. 


Companies  marked  *  are  not  corporations,  but  joint  stock  companies 
or  voluntary  associations. 


INDEX. 


Page 

ALABAMA            .........  26 

ALIENS-NON-RESIDENT     .....      106,  109,  111 

ARIZONA    ..........  28 

ARKANSAS          .........  70 

CALIFORNIA 81 

CANADA 120 

COLLATERAL  INHERITANCES  DEFINED        ....  10 

COLORADO          . 90 

CONNECTICUT    .........  63 

CORPORATIONS,  LIST  OF    .......  127 

DELAWARE         .........  35 

DIRECT  INHERITANCES  DEFINED        .....  10 

DISTRICT  OF  COLUMBIA     .......  27 

DOUBLE  TAXATION,  ATTEMPTS  To  AVOID    ....  118 

EXEMPTIONS,    TABLE          .         .         .          .         .  .14 

FLORIDA    ..........  28 

GENERAL  RULES       ........  21 

GEORGIA    .         .         .         .         .         .         .         .         . .        .  28 

HAWAII 14 

IDAHO 83 

ILLINOIS .60 

INDIANA    ..........  29 

IOWA 109 

KANSAS     ..........  74 

KENTUCKY         .........  101 

LOUISIANA         .........  106 

MAINE       ..........  53 

MARYLAND         .........  34 

MASSACHUSETTS         ........  38 

MICHIGAN          .........  96 

MINNESOTA 84 

MISSISSIPPI 29 

MISSOURI           .         .        .._— ^.         .....  37 

MONTANA  86 


140  INDEX. 

Page 
NEBRASKA         .........        76 

NEVADA    ..........        29 

NEW  HAMPSHIRE 56 

NEW  JERSEY 103 

NEW  MEXICO    .........        29 

NEW  YORK       .........        44 

NON-RESIDENTS,  WHAT  STATES  TAX,  TABLE     ...        19 

NORTH  CAROLINA 67 

NORTH    DAKOTA        ........        88 

OHIO 36 

OKLAHOMA 50 

OREGON ; 93 

PENNSYLVANIA 30 

PORTO  Rico 15 

RATES  OF  TAX,  TABLE 14 

RHODE  ISLAND  .........        27 

SOUTH  CAROLINA       .  •      .         .         .  .         .         .29 

SOUTH    DAKOTA         ........        89 

TABLES: 

EXEMPTIONS 14 

RATES         .         .         .         .         .         .         .         .         .14 

STATES  THAT  TAX  INHERITANCES       .         .         .         .        11 

STATES  THAT  TAX  FOREIGN  CORPORATIONS  OWNING 

PROPERTY -      .        19 

STATES  THAT  TAX  NON-RESIDENT  SECURITY  HOLDERS        19 
STATES  THAT  Do  NOT  TAX  INHERITANCES    .         .  •       .        26 

TENNESSEE »  .        69 

TEXAS .72 

TRUST  CERTIFICATES .'       .117 

UNIFORM  LEGISLATION,  PROPOSED     .         .         .         .         .113 

UNITED   STATES .10 

UTAH .         .92 

VERMONT  .         .         .         .         .         .         .         .         .58 

VIRGINIA .33 

WASHINGTON •      .         .111 

WEST   VIRGINIA         .         .         .         .         .         .         .         .       98 

WISCONSIN        .         .         .         .        .  •      .         .        .        .       78 

WYOMING  ....  95 


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INHERITANCE  TAXES 

The  Boston  Book  Company  announces  that  an 
authoritative  treatise  on  Inheritance  Taxes  is  in  prep- 
aration, to  be  published  about  Sept.  I,  1911.  This 
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(Of  the  Boston  Bar;  author  of  Massachusetts  Court  Rules  Annotated;   The 

Abolition  of  Grade  Crossings  in  Massachusetts;  the  article  on 

Wills  in  "CYC,"  etc.,  etc.) 

and 

HUGH  BANCROFT 

(Of  the   Boston  Bar;     sometime   District  Attorney,   Middlesex  County, 
Massachusetts;  and  a  director  of  the  Boston  News  Bureau.) 


Orders  for  this  book  may  be  sent  to  the  Boston  News  Bureau,  25 
Exchange  Place,  Boston,  Mass. 


,.ii?.?.9.4I^RN  REGIONAL  LIBRARY  FACILITY 


A     000  692  073     o 


